Union Budget 2023: FM announces revamped credit guarantee scheme for MSMEs

Finance Minister Nirmala Sitharaman presenting Union Budget 2023.

Finance Minister Nirmala Sitharaman in her Budget speech on February 1 announced a revamped credit guarantee scheme for micro, small and medium enterprises (MSMEs).

The revamped credit guarantee scheme for MSMEs will come into effect from April 1, 2023, with an infusion of Rs 9,000 crore into the corpus, the FM said.

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This will enable another collateral-free credit of Rs 2 lakh crore. Further, the cost of credit will be reduced by around 1 percent, she added. Experts reckon that the move will prove to be good news for MSMEs that are still recovering from the COVID-19 pandemic.

The credit guarantee scheme had a choppy start but over the last two years, banks have been brought on board to lend, and the scheme has helped in alleviating stress in the sector.

The recovery of India's MSMEs was advancing swiftly, according to the Economic Survey 2022-23 tabled in Parliament on January 31. The Economic Survey also said that the Emergency Credit Linked Guarantee Scheme (ECLGS) offset the impact of the COVID-19 shock on the units through robust credit disbursement.