Did MSME Budget Increase By 650% in Past 8 Years as PM Modi Claimed?
Although the budget of the MSME sector has risen exponentially but not as much as the PM claimed
Prime Minister Narendra Modi attended the Udyami Bharat programme in New Delhi last week and launched a few initiatives to ramp up the Micro, Small, and Medium Enterprises (MSME) sector. The PM, while speaking at the event, said the sector is the foundation of India's growth.
"These MSMEs are one of the main pillars of Aatma Nirbhar Bharat. They have 1/3rd share in our economy, if India earns ₹100, ₹30 is because of our MSMEs… Through necessary changes in policies, the government is supporting the growth & expansion of MSMEs in the country," said PM Modi.
He also made certain claims regarding the funds released for MSMEs, loans sanctioned, and growth of the sector in the country. Factchecker referred to official data for some of the quantifiable claims to find out if they were accurate.
Claim #1: Budget allocation for MSME sector has increased by 650% under the NDA govt in the past eight years
Fact: The claim is false since the increase is not as high as the PM claims.
The budget amount allocated to the MSME ministry has been rising over the years with this year's (2022-23) budget allocation being Rs 21,422 crore. Although the MSME ministry's budget estimate, which is the amount allocated in the Union Budget to any ministry or scheme for the coming financial year, grew exponentially in the last eight years– but not as much as PM Modi claimed.
In 2013-14, the amount allocated for MSMEs was Rs 3,285 crore, which shows an increase of 552% by 2022-23 and not 650% as claimed.
Actual expenditure for a particular fiscal year is derived after auditing receipts and that's why this figure is available only after the money has been spent. So, the most recent available data on actuals are up to FY 2020-21. Actual expenditure in 2020-21 by the MSME ministry saw an 18% dip from the previous year.
According to Factchecker's analysis of the Union Budget, the major push in the MSME budget allocation has come in the last two years, with the year-on-year increase being Rs 5,722 crore from FY 2022 to FY 2023, and Rs 8,128 crore from FY 2021 to FY 2022. Before this, the average yearly increase in the MSME budget was Rs 536 crore a year.
While budget estimates declare the intention to spend, revised estimate is the revised figure released after assessing the need for grants and other factors, and more often deviates from the initial allocation.
In the last two years, a major chunk of the budget for the MSME ministry is directed towards the Guaranteed Emergency Credit Line (GECL), which was introduced by the Centre in May 2020, to help such enterprises tide over the economic distress due to the COVID-19 pandemic.
In the current year 2022-23, Rs 15,000 crore has been allocated to GECL out of the MSME ministry's total budget of Rs 21,422 crore. In the previous year, 63% or Rs 10,000 crore out of the total allocated amount of Rs 15,700 crore was towards this particular scheme in 2021-22.
Claim #2: Under the ECLGS, Rs 3.5 lakh crore have been ensured for MSMEs
The Emergency Credit Line Guarantee Scheme (ECLGS) was launched in May 2020 as part of the Aatmanirbhar Bharat Abhiyaan "to support eligible Micro, Small and Medium Enterprises and other eligible business enterprises in meeting their operational liabilities and restarting their businesses in the context of the disruption caused by the COVID-19 pandemic". It is operated under the Union Ministry of Finance.
According to a Lok Sabha response by the Minister of State from the Finance Ministry Bhagwat Karad, Rs 3.19 lakh crore was sanctioned under the scheme to MSMEs and other businesses, as of March 2022. Of this, Rs 2.59 lakh crore was actually disbursed. The claim, therefore, is misleading.
Additionally, the same Lok Sabha response mentioned that, according to the Reserve Bank of India data, the gross value of Non-Performing Assets (NPA) in the MSME loan portfolio of Scheduled Commercial Banks was at Rs 1.82 lakh crore in March 2021. This represents an increase of almost Rs 20,000 crore over the March 2020 figure.
Borrowers with stressed accounts in which payment is due for more than 90 days are classified as NPA. The aggregate gross NPA ratio had moderated from 11.3% in September 2021 to 9.3% in March 2022, according to the RBI's latest Financial Stability Report, but still remains relatively high, Financial Express reported.
We contacted Punya Srivastava, Additional Secretary to the PM but the call did not connect, and then we called Lokesh Kumar, Assistant Personal Secretary to the MSME Minister, but he was then unavailable to speak and later did not answer our call. We have also written to the PM's office and the MSME ministry for clarification on the claims. If and when we receive a response, it will be updated here.