MSMEs Funding in Budget 2024

What You Need to Know About the New Treasury for MSMEs and Expert Concerns

The Union Budget 2024, which was unveiled on Tuesday, is praised for being a major help to the MSME (Micro, Small, and Medium-Sized Businesses) industry. A number of steps aimed at assisting MSMEs were introduced by Finance Minister Nirmala Sitharaman, but experts are also raising significant concerns about the policies’ real-world effects.

Key Announcements for MSMEs in Budget 2024

The budget introduced several crucial updates for the MSME sector:

• Credit Guarantee Program: A new program was unveiled to assist MSMEs and manufacturing firms with the purchase of machinery and equipment. This program offers term loans without requiring assurances from third parties or collateral.
• Novel Model of Assessment: The goal of a redesigned evaluation approach for government bank MSME credit is to improve financing accessibility and expedite loan approvals.
• Mudra Loan Limit Increased: For business owners repaying previous loans, the Mudra loan limit has been raised from ?10 lakh to ?20 lakh. It is anticipated that this action will yield more significant financial assistance.
• SIDBI Branch Expansion: With an emphasis on supporting MSMEs, the Small Industries Development Bank of India (SIDBI) will open new branches.
• Credit assistance System: To help MSMEs experiencing financial difficulties as a result of unforeseen situations, a new credit assistance system will be implemented.

Challenges and Expert Opinions

These declarations are encouraging, but there are still worries. The founder and managing trustee of Bharatiya Yuva Shakti Trust, Lakshmi Venkatraman Venkatesan, notes that the typical ?40,000 Mudra loan sum is frequently insufficient for launching a firm. She supports a minimum three-month stabilization period and a higher average loan amount of ?4 lakh. Venkatesan also highlights the need of the government concentrating more of its efforts on aiding marginalized communities, which usually receive less bank money. These groups include women and young Dalit people living in rural areas.

Conclusion

The Union Budget 2024 has introduced several initiatives aimed at bolstering the MSME sector, including increased loan limits and new financing schemes. However, challenges remain, particularly in ensuring adequate support for small enterprises and marginalized groups. As the budget unfolds, it will be crucial for the government to address these concerns to maximize the benefits for MSMEs.

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