Inclusion of Retail and Wholesale Trades under MSME
Part of: GS Prelims and GS -III – Economy
- The government has recently included retail and wholesale traders under the MSME (Micro, small and medium Enterprises) classification.
What are the implications of this inclusion?
- MSME sector includes Industrial sector and Services sector but does not include Agriculture sector.
- Though all the Retail and wholesale trade is part of Services sector, they were not considered as MSMEs.
- Since MSMEs are part of the Priority Sector Lending (PSL) Guidelines, now Retail and Wholesale trade will be able to avail loan under PSL.
- Priority Sector Lending is an important role given by the RBI to the banks for providing a specified portion of the bank lending to few specific sectors.
- These sectors of the economy, that has high social return and are much needed for inclusive development, may not get timely and adequate credit in the absence of this special dispensation.
- Banks today, lend nearly 40% of their adjusted net bank credit (ANBC) to the priority sector.
Pic courtesy: Vitt Arth