The World Bank on Wednesday announced a $ 750 million MSME Emergency Response program to support increased flow of finance to micro, small, and medium enterprises (MSMEs), severely impacted by the COVID-19 crisis.
This programme will address the immediate liquidity and credit needs of some 1.5 million viable MSMEs to help them withstand the impact of the current shock and protect millions of jobs.
This is the first step among a broader set of reforms that are needed to propel the MSME sector over time, it said in a statement.
“The MSME sector is central to India’s growth and job creation and will be key to the pace of India’s economic recovery, post COVID-19,” said Junaid Ahmad, World Bank Country Director in India.
He said the immediate need is to ensure that the liquidity infused into the system by the government is accessed by MSMEs.
“Equally important is to strengthen the overall financing ecosystem for MSMEs,” he said adding that this operation seeks to achieve both these objectives by furthering the role of NBFCs and small credit banks as effective financial intermediaries and leveraging fintech to broaden the reach of finance into the MSME sector.
The World Bank has to date committed $ 2.75 billion to support India’s emergency COVID-19 response, including the new MSME project. The first $ 1 billion emergency support was announced in April this year for immediate support to India’s health sector. Another $ 1 billion project was approved in May to increase cash transfers and food benefits to the poor and vulnerable, including a more consolidated delivery platform – accessible to both rural and urban populations across state boundaries.