The Government of India and the World Bank have signed a 750 million dollar deal on Monday to boost the flow of cash in micro, small and medium enterprises (MSME) which is the backbone of our economy, contributing to 30 per cent of the GDP. MSMEs are severely impacted by the COVID-19 crisis. This sector which employs around 180 million people is burdened by the loss of customers, cancelled orders disrupt in the supply chain – causing in the fall of revenues, which is why a business loan deal worth $750 million is proposed.
“The World Bank’s MSME Emergency Response Programme will address the immediate liquidity and credit needs of some 1.5 million viable MSMEs to help them withstand the impact of the current shock and protect millions of jobs,” the Ministry of Finance said in a statement.
“COVID-19 pandemic has severely impacted the MSME sector leading to loss of livelihoods and jobs. The Government of India is focused on ensuring that the abundant financial sector liquidity available flow to NBFCs, and that banks which have turned extremely risk-averse, continue taking exposures in the economy by lending to NBFCs,” Sameer Kumar Khare, Additional Secretary, Department of Economic Affairs, Ministry of Finance, said.
The world bank has given India’s emergency COVID-19 response $2.75 billion, including the new MSME project. The first billion-dollar support was announced in April this year to support the health system. Another one billion was approved in the month of may this year to support the poor and vulnerable for food benefits.
Meanwhile, the World Bank said that the multi-phased lockdown imposed to curb the COVID-19 spread has resulted in a fall in the Indian economy