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    Home Emergency Credit Line Guarantee Scheme supported MSMEs during COVID, led to remarkable credit growth: Economic Survey
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    Emergency Credit Line Guarantee Scheme supported MSMEs during COVID, led to remarkable credit growth: Economic Survey

    InvestPolicyBy InvestPolicyJanuary 31, 2023No Comments2 Mins Read
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    Emergency Credit Line Guarantee Scheme supported MSMEs during COVID, led to remarkable credit growth: Economic Survey
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    Finance Minister Nirmala Sitharaman speaks in the Lok Sabha on the first day of Budget Session of Parliament
    | Photo Credit: –

    The recovery of India’s micro, small, and medium enterprises is advancing swiftly, with the Emergency Credit Linked Guarantee Scheme (ECLGS) offsetting the impact of the COVID-19 shock on the units through robust credit disbursement, as per the Economic Survey 2022-23 tabled in Parliament on January 31.

    India has more than six crore micro, small and medium enterprises that employ close to 12 crore workers across sectors and industries while contributing nearly 35% to the country’s gross domestic product (GDP).

    Also Read | Economic Survey 2022-23 live updates | Economic survey estimates 7% GDP growth in 2022-23

    According to the Survey, “The credit growth to the micro, small and medium enterprises sector has been remarkably high, over 30.6% on average during January-November 2022, supported by the extended Emergency Credit Linked Guarantee Scheme of the Union government.”

    “The recovery of MSMEs is proceeding apace, as is evident in the amounts of Goods and Services Tax (GST) they pay, while the Emergency Credit Linked Guarantee Scheme is casing their debt servicing concerns,” it added.

    In FY21, the government announced the Emergency Credit Linked Guarantee Scheme, which succeeded in shielding micro, small and medium enterprises from financial distress.

    Also Read | In pandemic shock, critical lessons for MSMEs

    Quoting a recent CIBIL report, the Survey said it showed that the scheme has supported MSMEs in facing the COVID-19 shock, with 83% of the borrowers that availed the ECLGS being micro-enterprises. Among these micro units, more than half had an overall exposure of less than ₹10 lakh.

    Furthermore, CIBIL data also showed that ECLGS borrowers had lower non-performing asset rates than enterprises that were eligible for ECLGS but did not avail of it, the Survey pointed out.

    The GST paid by MSMEs after declining in FY21 has been rising since and now has crossed the pre-pandemic level of FY20, reflecting the financial resilience of small businesses and the effectiveness of the pre-emptive government intervention targeted towards MSMEs.

    Budget budget india budget news Economic impact of the COVID-19 pandemic Economic Survey Economic Survey 2022-23 Economic survey india economic survey msme Economic survey news economic survey Nirmala Sitaraman Economic Survey on Emergency Credit Line Guarantee Scheme Economic Survey on msme economy impact of covid on indian economy India MSMEs indian economy Inflation
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