MSMEs contribute significantly to economic and social development by fostering entrepreneurship and by generating employment opportunities, mentions the Economic Survey 2021-22 tabled in the Parliament on Monday, adding that relative importance of the sector can be gauged from the fact that the share of MSME GVA in total GVA (current prices) for 2019-20 was 33.08 percent. The survey makes some important observations, which are worth mentioning.

On key safety measures taken by the Centre to prevent distress for MSMEs during the pandemic period, the survey makes specific mention about 6-month moratorium and deferment of interest (March-August 2020) for all term loans by RBI, restructuring of MSME default loans (Aug 2020 and May 2021), Emergency Credit Line Guarantee Scheme and Credit Guarantee Scheme (CGS) for MSMEs. Needless to say, these schemes have contributed in a big way to protecting the sector.

On key supply side measures and reforms taken by the government for the MSME sector, the survey points to initiatives like revised definition of MSMEs, simplified registration process for MSMEs and increase in market access to MSEs under public procurement policy. In addition, it also mentions about the Factoring Regulation (Amendment) Act, 2021, which seek to widen the factoring ecosystem to help MSMEs.

On the credit scenario, the survey states that credit growth to industry which contracted from October to December 2020 entered positive territory in January 2021 and it is improving steadily since July 2021. Bank credit to micro & small industries accelerated to 12.7 percent in November 2021, while credit growth to medium industries was at 48.7 percent in November 2021, as compared with 25.7 percent in November.

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