Key Recommendations from NITI Aayog’s Report:
Title: “Enhancing Competitiveness of MSMEs in India”
- Reform of CGTMSE:
- Greater transparency and oversight: The Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) should be brought under a formal regulatory authority to improve governance and accountability.
- Reduced premium rates: Lowering guarantee premiums to make the scheme more attractive and accessible for micro and small enterprises.
- Enhanced coverage for women-led units: 100% credit guarantee coverage should be extended to women-led enterprises to encourage female entrepreneurship.
- Addressing Governance Gaps:
- Currently, the Trust lacks regulatory oversight and clear governance structures.
- Recommendations call for balancing fund availability with financial discipline, particularly for low-end entrepreneurial activities.
- Credit Utilization Focus:
- Emphasis not just on access to credit, but on effective credit utilization.
- Advocates better resource allocation at the enterprise, government, and institutional levels.
- Calls for building a system that supports sound financial decision-making and risk mitigation beyond just formalised MSMEs.
- Technological & Fiscal Interventions:
- Push for MSMEs to adopt emerging technologies such as Artificial Intelligence, supported through both financial and infrastructural assistance.
- Cites findings from a NASSCOM–Meta study highlighting technology’s role in MSME competitiveness.
Background
- CGTMSE, launched in 2000, is a key government initiative to provide collateral-free credit to India’s micro and small enterprises.
- It is jointly managed by the Ministry of MSME and SIDBI.
Implications
- A reformed CGTMSE can enhance formal credit outreach, particularly to underserved segments like women entrepreneurs.
- Technological integration and risk-aware lending practices can broaden the impact of government schemes across India’s vast MSME landscape.
