On June 30, 2020 The World Bank approved a USD 750 million (about Rs.5600 Crore) Micro, Small, and Medium Enterprises(MSMEs) Emergency Response Program to support severely impacted MSMEs in India due to COVID-19 crisis. The International Bank for Reconstruction and Development(IBRD) will provide the loan.
i.The World Bank’s MSME Emergency Response program will address the immediate liquidity and credit needs of around 1.5 million applicable MSMEs.
ii.This program will help them to handle current shock and protect millions of jobs.
Maturity Period of the loan– The loan has a maturity of 19 years including a 5-year grace period.
Significance of MSME sector– It is the backbone of Indian economy & contributes about 30 % to India’s GDP and 40% to exports. The sector employs about 150-180 million people.
World bank’s assistance to India
i.The World bank has lent USD 5.13 billion to India in the financial year 2020. It has distributed about four billion dollars in FY 2020.
ii.Till now the World Bank has committed USD 2.75 billion to support India’s emergency COVID-19 response, including the MSME project.
- First USD 1 billion emergency support was announced in April, 2020 to support India’s health sector.
- Another USD 1 billion project was approved in May, 2020 to increase cash transfers and food benefits to the poor and vulnerable
i.The World Bank group will distribute up to USD 160 billion to help more than 100 countries as a financial aid over 15 months, which will enable them to protect the poor and vulnerable, support businesses, and improve economic recovery.
ii.This includes USD 50 billion of International Development Association(IDA) resources through grants and highly concessional loans.
About World Bank:
Headquarters- Washington, D.C., United States
President- David R. Malpass