MSME sector
The Central Government has approved to provide equity assistance of Rs 5,000 crore to Small Industries Development Bank of India (SIDBI). This decision was taken in the Union Cabinet meeting chaired by Prime Minister Narendra Modi. The government believes that this step will increase credit availability to micro, small and medium enterprises (MSMEs) and they will be able to get financial assistance at lower interest rates.
According to the official press release, this amount will be transferred to SIDBI in three installments through the Department of Financial Services (DFS). An investment of Rs 3,000 crore will be made in FY 2025-26, while equity of Rs 1,000 crore each will be infused in FY 2026-27 and 2027-28. The first installment will be at the book value of Rs 568.65 per share as on March 31, 2025, while the remaining two installments will be fixed at the book value of March 31 of the previous year of the respective financial year.
MSME is the backbone of the country’s economy.
According to the government, this additional capital will help SIDBI to raise resources at lower cost from the market. With this, the bank will be able to provide loans to the MSME sector at more competitive interest rates. At present, MSMEs are considered the backbone of the country’s economy and their role in employment generation is very important. It has been told that after this equity investment, the number of 76.26 lakh MSMEs getting financial assistance by the end of the financial year 2024-25 can increase to about 1.02 crore by the end of the financial year 2027-28. That means, approximately 25.74 lakh new MSMEs will be connected to the formal financial system through SIDBI.
Employment opportunities in the country will also increase rapidly
The government hopes that with this initiative, employment opportunities in the country will also increase rapidly. It is estimated that by the end of 2027-28, due to this capital investment, about 1.12 crore new jobs can be created. This will not only strengthen small industries but will also give impetus to economic activities at the local level. Experts believe that this decision to strengthen SIDBI will also support Make in India, self-reliant India and startup ecosystem. By getting easy and cheap loans, small businessmen will be able to adopt new technology, increase production and enter new markets, which will boost the overall economic growth of the country.