Budget 2024: Major Boost for MSMEs - MUDRA Loan Limit Doubled, New Credit Guarantee Scheme Announced

Union Finance Minister Nirmala Sitharaman on Tuesday announced a significant boost for micro, small, and medium enterprises (MSMEs) in her budget speech. Sitharaman revealed that the limit for MUDRA loans for MSMEs has been doubled from Rs 10 lakh to Rs 20 lakh for those who have previously availed and successfully repaid these loans.

In a further effort to support the MSME sector, Sitharaman introduced a new credit guarantee scheme specifically for MSMEs in the manufacturing sector. The NDA 3.0 government has committed to providing a guarantee cover of up to Rs 100 crore for manufacturing MSMEs.

Credit Guarantee Scheme Details

Under this new credit guarantee scheme, MSMEs can obtain loans without the need for collateral or third-party guarantees. The Finance Minister emphasized that term loans will be facilitated for the purchase of machinery, enhancing the sector's operational capabilities.

Facilitating Loans Without Collateral

Finance Minister Nirmala Sitharaman elaborated on the credit guarantee schemes for manufacturing MSMEs, stating, "To facilitate term loans for MSMEs for the purchase of machinery and equipment without collateral and guarantee, a new scheme will be introduced. This guarantee fund will provide guarantees of up to Rs 100 crore."

Continued Support and Technology Financing

The Finance Minister also announced new measures to ensure the continuation of bank credit to borrowers during periods of stress. Additionally, a package to finance technology support for MSMEs has been formulated.

Expert Opinions

Abhishek Gupta, Founder and Managing Partner at Pierag LLP Consulting, commented on the new scheme, urging MSMEs to seize this opportunity to invest in advanced machinery and equipment. "Overall, this credit guarantee scheme is a promising development for the MSME sector, and we look forward to witnessing its positive impact on the growth and sustainability of businesses across the country," Gupta stated.

Financial Support for MSMEs

The budget also included financial support for 50 multi-product food irradiation units in the MSME sector. Earlier in her speech, Sitharaman highlighted the Centre's continued focus on the MSME sector, alongside employment, skilling, and middle-class support.

TReDS Platform Enhancement

In line with the Modi government's 'Viksit Bharat' vision, Sitharaman announced a reduction in the turnover threshold for mandatory onboarding on the TReDS platform from Rs 500 crore to Rs 250 crore. The TReDS platform is designed to assist MSMEs in managing their finances more efficiently.

E-Commerce Hubs and Rural Development

Sitharaman mentioned the establishment of e-commerce hubs in a public-private partnership (PPP) mode, aimed at enabling MSMEs and traditional artisans to market their products internationally. She also allocated Rs 2.66 lakh crore for rural development and announced that Small Industries Development Bank of India SIDBI would open 24 new branches to serve MSME clusters. Additionally, the government will launch a saturation drive under the Pradhan Mantri Janjati Adivasi Nyaya Maha Abhiyan (PM JANMAN).

Conclusion

The 2024 Union Budget, presented by Finance Minister Nirmala Sitharaman, has placed a strong emphasis on boosting the MSME sector. The doubling of the MUDRA loan limit and the introduction of a substantial Rs 100 crore credit guarantee scheme for manufacturing MSMEs are key initiatives aimed at facilitating growth and sustainability within the sector.

By enabling access to collateral-free loans and supporting technological advancements, the government is addressing critical financial and operational challenges faced by MSMEs.

Additionally, measures such as the enhancement of the TReDS platform, the establishment of e-commerce hubs, and substantial allocations for rural development reflect a holistic approach to empowering MSMEs and driving economic progress.

The budget's comprehensive support for employment, skilling, and rural development underscores the government's commitment to fostering inclusive growth and achieving the 'Viksit Bharat' vision.