According to the “Ease of Doing Business” report published periodically, India ranked 142nd in 2014. In 2019, as per this same report, India ranked at 63rd.
It is one of the many positive changes that the Indian economy has witnessed over this past decade, heralding the coming of a flourishing business ecosystem in the times to come.
Some other statistics that corroborate to the above claim are –
- In 2010, the services sector accounted for 45.4% of India’s GDP, which rose to 48.5% by 2019.
- India’s nominal GDP in 2010 was $450 billion, which sprang to $2.94 trillion in 2019.
- The number of MSMEs in India increased from 30 million in 2010 to 63 million in 2019
It only goes on to show the robust economic sphere that India is growing to be backed by the rising surge of MSMEs.
Nevertheless, it would not have been possible without the growing emphasis of the Government of India on the MSME sector that makes up a significant portion of India’s economy, with the introduction of facilities like MUDRA loan scheme strengthening its cause.
What are some of the financing schemes that have strengthened India’s economy?
Apart from facilities like the MUDRA loan scheme, the Government of India has launched or enhanced several financing schemes for businesses over the past decade.
Alongside the government, several eminent financial institutions have also come forward to provide easy access to credit facilities like business loans at convenient terms.
The initiative to make such credit facilities convenient and straightforward for businesses to acquire has also significantly contributed to economic growth.
The following are different government business loans schemes in India –
- Credit Guarantee Fund Scheme for MSEs
The government introduced the Credit Guarantee Fund Scheme in 2000 to provide a collateral-free funding avenue for micro and small business enterprises. It provides monetary assistance to both new and existing enterprises that qualify for the scheme.
However, the facility of collateral-free credit is only available for loans of up to Rs.10 lakh under this business loan scheme. Any amount above that and up to Rs.1 crore shall be secured with collateral assets such as land or building. Nevertheless, this scheme has significantly contributed to furthering the MSE vista of India.
- MUDRA loan
The government introduced the Pradhan Mantri Mudra Yojana (PMMY) in 2015 to provide much needed financial assistance to micro-business units primarily, which often struggle for funding. Thus, the MUDRA loan scheme also goes by the motto of “fund the unfunded”.
It is also the latest in the array of financial assistance schemes that the government endorses and is thus, more suited to the contemporary monetary needs of businesses. MUDRA loans provide three categories of financial products, viz Shishu, Kishore, and Tarun.
- 91 million – the number of individuals who benefited from the PMMY scheme.
- 5.71 trillion – the value of loans sanctioned under the scheme.
You can avail a MUDRA loan from any of the empanelled financial institutions under this scheme. Additionally, you need to substantiate your credit record and eligibility before you can avail a business loan under this scheme.
- National Small Industries Corporation Subsidy
This subsidy scheme is associated with two facets – raw material and marketing assistance. Therefore, businesses, especially SMEs, can avail financial assistance for raw materials purchased.
Furthermore, they can also avail loans for other objectives like marketing to improve their competitiveness and value. That is one of the ways how business loans can keep a business financially healthy.
- Credit Link Capital Subsidy Scheme for Technology Upgradation
Another government-endorsed financing scheme that has played a critical role in bolstering the Indian market is the CLCSS for Technology Upgradation. Businesses can avail a subsidy of up to 15% on business loans under this scheme subject to a maximum of Rs.15 lakh.
However, such subsidy can only be availed by businesses to upgrade only the technology used in numerous business processes such as production, supply chain, etc.
Therefore, you can alternatively opt for a business loan with no end-usage restriction to finance your other operations like enhancing working capital, channel financing, investing in infrastructure, or improving workforce. Reputed financial institutions provide such loans without collateral, thus, simplifying loan availability.
Furthermore, NBFCs like Bajaj Finserv bring pre-approved offers on loans that eliminate the tedious hassle involved in availing a loan and making the process more convenient.
- As of January 2020, the MSME sector is exposed to total credit valuation of Rs.17.75 trillion.
Thence, facilities like MUDRA loan scheme combined with an empowered financial sector providing convenient credit facilities have been instrumental in driving the Indian market forward.