India Budget 2024: Finance Minister Sitharaman extends a helping hand to MSMEs

Budget 2024: Finance Minister Nirmala Sitharaman on Tuesday announced a new credit guarantee scheme aimed at facilitating term loans for Micro, Small, and Medium Enterprises (MSMEs), while presenting the full budget for 2024-25.

The scheme will operate on the cooling of credit risks of such MSMEs. A self-financing guarantee fund will provide to each applicant cover of up to Rs 100 crore while the loan amount may be larger.

Sitharaman said, "For facilitating term loans to MSMEs, a credit guarantee scheme will be introduced. The scheme will operate on the cooling of credit risks of such MSMEs. A self-financing guarantee fund will provide to each applicant cover of up to Rs 100 crore while loan amount may be larger."


The initiative aims to bolster MSMEs by reducing credit risks and enhancing access to financing.

The Micro and Small & Medium Enterprises (MSMEs) had urged Sitharaman for a special package in order to get better access to institutional credit at competitive rates. The industry had sought for a package that provides a more balanced relationship between banks and MSMEs.

In 2021-22, the MSME sector contributed over 29 per cent to the GDP. In 2023-24, the share of MSME-specified product exports rose to 45.56 per cent, indicating their significant role in the country's overall exports. Consultancy firm Deloitte had suggested promoting risk mitigation tools like credit guarantees and insurance schemes, especially for sectors such as automotive, electronics, industrial, and electrical machinery in the budget.

With merely six per cent of MSMEs actively selling on e-commerce platforms, the industry experts had also highlighted the need for a digital transformation.

The Union Budget 2023-24 had allocated Rs 22,137.95 crore for the MSME ministry, a 41.6 per cent increase from the previous fiscal year.

The MSME ministry implemented various schemes, including MSME Champions Scheme, CGTMSE, PMEGP, MSE-CDP, and RAMP, aimed at promoting and developing the sector in the country.