The MSME sector is expected to experience half-time growth in the fiscal year 2022

The MSME sector is expected to experience half-time growth in the fiscal year 2022

Celebrating the vital role of MSMEs (Micro, Small, and Medium Enterprises) in India’s economic recovery, ASSOCHAMCRISIL’s latest joint study titled “MSMEs Back to the Grind.” It adds that the sector is expected to achieve moderate growth in the fiscal year 2022 with the resumption of economic activities.

“Amid a global pandemic, India has found its innate strength to weather the storm and focus on growing its national ecosystem, on supporting both the Indian and global markets. Aatmanirbhar Bharat’s vision has been identified by Prime Minister Narendra Modi and led by Deepak Sood, Secretary-General of ASSOCHAM. Moreover, in the report, the Indian industry is confident it will help us raise our global game.

 Considered to be the engine of economies worldwide, the MSME phase in India alone is estimated to have 6.3 crore items, which employs over 11.10 crore folks. The sector accounts for 27% of GDP.

It is essential to the functioning of the financial system, together with phrases of employment era, exports, and lending alternatives. The sector was the worst hit throughout the COVID19 pandemic and the lockdown adopted in 2020.

 Crediting MSMEs for placing the nation on the agency path of financial restoration in 2022 after having had it powerful in 2021, Bhushan Parekh, CRISIL SME Solution Director, elaborated in the report, “A raft of measures by the government under its Aatmanirbhar Bharat banner has provided a reprieve to MSME segment in recent months.”

Furthermore, these include Rs 20,000 crore subordinated debt for stressed MSMEs, Rs 50,000 crore equity infusion through SRI Fund (MSME Fund of Funds), 3lakh crore ECLGS (Emergency Credit Line Guarantee Scheme) for businesses, including MSMEs (which was subsequently increased to Rs 5lakh crore in Union Budget 202223), change in the definition of what constitutes an MSME, and no global tenders for government procurement up to Rs 200 crore.”

 The report additionally notes that if MSME lending by banking and nonbanking finance firms (NBFCs) in fiscal 2021 rose to 7% on the year, then the credit score is anticipated to develop by 79% (around Rs 18lakh crore) on year in fiscal 2022 supported by beneficial authorities measures in addition to a rise in demand. While banks continue to dominate around 80% of MSME lending volume, they are expected to reverse in the long term. One of the drivers for change is the digitization of the MSME sector. MSME’s digital footprint to expand in 2021, according to a CRISIL survey of 500 MSMEs. Moreover, this not only results in a better customer experience and improved operational efficiency and workforce but also makes it easier to reach monetization companies.

MSMEs also accounted for 50% of the export market share in the past 5 years. The report says export-related MSME sectors are on track to recover and may do so in the next financial year. “In the long term, this segment will continue to offer attractive opportunities for financiers as the global economy recovers, and major players adopt the Chinaplusone strategy to diversify their supply chains, promoting export-related MSMEs,” commented Mr. Parekh. “While the future is bright, short-term uncertainties around geopolitical tensions and rising global inflation could play a destructive role,” he agreed.

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