Focus: GS-III Indian Economy
Why in news?
The World Bank has approved $750-million loan to increase flow of finance to micro, small, and medium enterprises (MSMEs) in India.
The bank has lent $5.13 billion to India in the last year —the highest in a decade.
- India’s MSME sector, which contributes 30% of India’s GDP and 40% of exports, is currently facing severe stress.
- 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.
- This cash flow shortage is worsened by constraints to accessing finance, potentially creating solvency problems.
- The MSME sector is central to India’s growth and job creation, and will be key to the pace of India’s economic recovery post covid-19.
- The immediate need is to ensure that the liquidity infused into the system by the government is accessed by MSMEs.
Recently in news
$1-billion emergency support was announced for immediate support to India’s health sector followed by another $1-billion project to increase cash transfers and food benefits to the poor and vulnerable, including a more consolidated delivery platform—accessible to both rural and urban populations across state boundaries.