Prime Minister Narendra Modi is likely to announce a host of measures, including enhanced interest subsidy, for the micro, small and medium enterprises on November 2, an official said. The move would give a boost to the Micro, Small and Medium Enterprise (MSME) sector and help generate more jobs.
Enhanced interest subsidy to increase availability of affordable credit and loan disbursement for MSMEs could be among the measures, the official said.
The Finance Ministry is working on the proposals.
The MSME sector constitutes a vast network of over 63 million units and employs 111 million people, contributing around 30 per cent to the GDP.
It accounts for about 45 per cent of manufacturing output and around 40 per cent to total exports.
A major obstacle for growth of MSMEs is their inability to access timely and adequate finance as most of them are in niche segments where credit appraisal is a major challenge.
As per the RBI's Mint Street Memo report, note ban imposed in November 2016 has led to further decline in the already falling credit to the MSME sector, while GST roll out has not made any significant positive impact on overall credit to the sector but has deeply dented their exports.
About 97 percent of MSMEs operate in the informal sector.