World Bank approves $750 million fund to support India’s MSME Sector

The World Bank on July 1 has announced a $750 million MSME Emergency Response Program. It will support in increasing the flow of finance to micro, small and medium enterprises (MSMEs) that are impacted by COVID-19 pandemic.

The program will address the immediate liquidity and credit needs of some 1.5 million MSMEs in India. Apart from protecting jobs, the program will also help them in withstand the shock of a shattering economy.

This announcement takes the World Bank’s total commitment to 2.75 billion to support India’s emergency COVID-19 Response. This program will be the first step among a broader set of reforms that will be needed to propel the MSME sector over time.

World Bank supports India’s MSME Sector:

Junaid Ahmed, World Bank Country Director in India stated that the MSME sector is central to India’s growth as well as job creation. This sector will be a key that will speed up India’s economic recovery post-COVID-19 pandemic.

He mentioned that the immediate need is to ensure that the liquidity infused in the system by the government has been accessed by the MSME.

Junaid Ahmed further emphasized that it is equally important to strengthen the overall financing ecosystem for MSMEs. He also informed that this operation intends to achieve both these objectives by advancing the role of small credit banks and NBFCs as an effective financial intermediary to broaden the reach of finance in the MSME Sector.

World Bank’s contribution to India’s emergency COVID-19 Response:

By including this new MSME project, the World Bank has till date committed $2.75 billion to support India’s emergency COVID-19 response.

The first emergency support of $1 billion was announced in April 2020 for the immediate support to India’s Health Sector.

Another project of $1 billion was approved in May 2020 in order to increase the food benefits and cash transfers to the poor and vulnerable. It also included a more consolidated delivery platform that will be accessible to both urban and rural populations across state boundaries.