MSME sector is on a strong growth trajectory post the pandemic: SBI Research

• The variety of MSMEs have gone down in 2021-22 in comparison with 2020-21 as a result of quite a few MSMEs have grown larger and crossed the MSME threshold.
• MSMEs throughout all sectors have proven robust resilience to bounce again publish the pandemic-induced slowdown.
• The Udyam portal and the Emergency Credit score Line Assure Scheme have helped MSMEs to climate the storm.

The micro, small and medium enterprises (MSME) sector is charting a brand new story publish pandemic, with credit score development to MSMEs constantly increased – each on a year-on-year foundation and likewise as compared with bigger industries, in line with SBI Analysis.

Incentives supplied by the Emergency Credit score Line Assure Scheme (ECLGS), coupled with decrease gross non-performing asset (GNPA) ratios have helped in boosting credit score to MSMEs, the SBI Analysis report mentioned.

Curiously, the variety of MSMEs have gone down in 2021-22 in comparison with 2020-21 as a result of quite a few MSME items have grown larger and crossed the ₹250 crore turnover threshold that defines an MSME unit beneath the brand new definition, enforced in 2020. An organization larger than ₹250 crore is taken into account a mid-sized company agency.

MSMEs have proven robust resilience to bounce again from the pandemic- induced slowdown seen in 2020. In some sectors that weren’t affected by the pandemic – like hospitality, building, NBFCs, energy, metals and so forth, the credit score excellent as of March 2022 was virtually 3x that seen in March 2018.

There have been sectors that had been affected however have recovered from the pandemic – like edible oil, printing, shopper durables, prescribed drugs, jute, aviation, and many others, – with credit score growth for a few of these in March 2021 decrease than the March 2018 ranges, however these have staged a sensible restoration in March 2022, the report mentioned.

Some industries like mining, petrochemicals, cement, FMCG and others had been deeply impacted by the pandemic however have virtually recovered.

A few initiatives from the Authorities of India might have helped MSMEs climate the storm and chart a robust development story, in line with SBI Analysis.

Udyam portal: Turning casual micro enterprises formal

In July 2020, the Authorities of India launched Udyam Help Platform (UAP) to convey all of the Casual Micro Enterprises (IMEs) – which represent round 99% of the MSMEs within the nation – into the formal ambit with out complicated and complex paperwork.

The UAP will allow IMEs who aren’t registered beneath GST to get a registration certificates primarily based on data with Banks/NBFCs. The Udyam registration can also assist MSMEs in availing the advantages of a number of schemes of the ministry of MSMEs equivalent to Credit score Assure Scheme, Public Procurement Coverage, further edge in authorities tenders and safety in opposition to delayed funds by corporates, and many others.

The IMEs can even turn out to be eligible for priority-sector lending by banks, have the ability to get collateral-free loans from banks and likewise have the ability to get licences, approvals and registrations simply.

ECLGS: A saviour throughout pandemic

The ECLG scheme acted as an enabler and helped MSMEs navigate the pandemic higher.

Whereas at the very least 14.6 lakh MSMEs accounts had been saved because of the ECLG scheme in absolute phrases, MSME mortgage accounts price ₹2.2 lakh crore improved for the reason that inception of the ECLG scheme for the complete banking business, as per SBI Analysis. Which means round 12% of the excellent MSME credit score has been saved from slipping into non-performing belongings (NPAs) due to the ECLG scheme.

Of the 14.6 lakh MSMEs accounts that had been saved because of the ECLG scheme, virtually 93.8% had been within the Micro and Small class. If such items slipped into NPA, 1.65 crore staff would have turn out to be unemployed.