Easy credit for MSMEs may not take off soon due to low demand

Capacity expansion unlikely in sector, will take 6 months for any impact to become visible: experts

The higher credit guarantee for micro, small- and medium-scale enterprises (MSMEs), announced by Prime Minister Narendra Modi on December 31, is unlikely to result in a greater loan offtake or growth in jobs due to lack of demand, according to economists.

Modi doubled the credit guarantee limit for MSMEs to Rs 2 crore. The move is, however, expected to improve liquidity.

"With such low demand, no one is going to engage in capacity addition. It will take around six months for any impact to become visible," said Devendra Pant, chief economist, India Ratings. CRISIL Chief Economist D K Joshi, while terming the