The World Bank said that they has approved a $500 million program to support MSMEs in India to increase liquidity access for viable small businesses impacted by COVID-19.

The World Bank’s Board of Executive Directors has approved a $500 million program to support the Government of India’s nationwide initiative to revitalize the MSME sector, which has been heavily impacted by the COVID-19 crisis.

The program targets improvements in the performance of 555,000 MSMEs and is expected to mobilize financing of $15.5 billion, as part of the government’s $3.4 billion MSME Competitiveness – A Post-COVID Resilience and Recovery Programme (MCRRP).

The MSME sector is the backbone of the India’s economy, contributing 30% of India’s GDP and 4 per cent of exports. Out of some 58 million MSMEs in India, more than 40 percent lack access to formal sources of finance.

The $500 million Raising and Accelerating Micro, Small and Medium Enterprise (MSME) Performance (RAMP) Program is the World Bank’s second intervention in this sector, the first being the $750 million MSME Emergency Response Program, approved in July 2020 to address the immediate liquidity and credit needs of millions of viable MSMEs severely impacted by the ongoing COVID-19 pandemic. To date, 5 million firms have accessed finance from the government program. With the program approved today, the World Bank’s financing towards improving the productivity and financial viability of the MSME sector amounts to $1.25 billion over the past year.