Business

Incremental Credit to India's Small Businesses Increased Sharply After GST: SBI Study

For the 15-month period post GST, the incremental credit to MSEs (under priority sector) has increased by five times to Rs 1.23 lakh crore from Rs 25,700 crore during the corresponding period pre-GST, the report said.

New Delhi: Incremental credit to micro and small enterprises (MSEs) has increased five times to Rs 1.23 lakh crore in the post-GST period, an SBI research report Tuesday.

The credit growth to MSEs is quite stupendous post-GST, the report by SBI Ecowrap said.

For the 15-month period post GST, the incremental credit to MSEs (under priority sector) has increased by five times to Rs 1.23 lakh crore from Rs 25,700 crore during the corresponding period pre-GST, the report said.

The deceleration in credit in the pre-GST period was partly due to an overall slowdown in economic activity, rising NPAs and reclassification of food and agro-processing units from MSME category to the agriculture sector (as per the revised priority sector lending guidelines, 2015), it said.

“The jump in credit to MSE sector bodes well for the formalisation of the Indian economy and its ensuing benefits,” said Ecowrap.

According to International Finance Corporation (IFC) estimates, the potential demand for India’s MSME finance is about $370 billion as against the current credit supply of USD 139 billion, resulting in a finance gap of USD 230 billion.

The report said that while credit growth still remains in comfortable territory for now, “we are now more concerned over a growth slowdown”.

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