The finance minister has announced the RAMP scheme in the Union Budget 2022-23. The scheme was launched by Government and supported by World Bank.
RAMP is a program to revive the MSME industry, which was severely damaged by the COVID-19 pandemic. The program is a part of “MSME Competitiveness: A Post-COVID Recovery and Resilience Programme” (MCRRP).
RAMP program will be implemented over a period of five years.
Aim of RAMP
RAMP was developed and put forth by the Government of India to support MSMEs in accordance with the recommendations of the U. K. Sinha Committee, the K. V. Kamath Committee, and the Economic Advisory Council to the Prime Minister (PMEAC).
The program’s aims include enhancing center-state cooperation and linkages, enhancing MSMEs’ access to markets and credit, modernizing technology, addressing concerns with late payments, and helping MSMEs become more environmentally friendly.
Interventions under the RAMP program aim to improve the performance of the MSME sector, which will lead to more employment opportunities.
What is MSME?
MSMEs are small-sized enterprises, defined and distinguished in terms of their investment. The criteria are based on Investment in Plant & Machinery/equipment and Annual Turnover and are classified into three categories Micro, Small, and Medium.
Micro: Investment in Plant and Machinery or Equipment should not be more than Rs.1 crore and Annual Turnover should not be more than Rs. 5 crore.
Small: Investment in Plant and Machinery or Equipment should not be more than Rs.10 crores and Annual Turnover should not be more than Rs. 50 crores.
Medium: Investment in Plant and Machinery or Equipment should not be more than Rs.50 crores and Annual Turnover should not be more than Rs. 250 crores.
The Micro Small and Medium Enterprises (MSMEs) industry makes a significant contribution to the country’s socioeconomic growth. Due to the sector’s contribution to the GDP and exports of India, it has taken on a substantial degree of importance. The sector has also made significant contributions to the growth of entrepreneurship, particularly in India’s semi-urban and rural areas.
World Bank and RAMP
Over 40% of MSMEs lack access to formal sources of financing, according to the World Bank’s Programme Appraisal Document for the RAMP program. The program intends to strengthen institutions and governance at the federal and state levels, as well as to increase market access and credit availability. The program, which focuses on the competitive component of MSMEs, will complement the government’s ongoing support initiatives.
The program would have a total cost of Rs. 6,062.45 crores, of which Rs. 3750 crores will come from a World Bank loan, and the remaining Rs. 2312.45 crores will be provided by the Government of India.
Implementation Strategy and Targets
Following the initial missions and studies, the program has identified two result areas, namely:
- strengthening the institutions and governance of the MSME program; and
- supporting market access, firm capabilities, and access to financing.
Funds flow through RAMP into the Ministry’s budget and the Ministry of MSME would focus on improving market access and competitiveness.
The disbursement of funds from the World Bank towards RAMP would be made on fulfilling the following Disbursement Linked Indicators:
- Implementing the National MSME Reform Agenda
- Accelerating MSME Sector Centre-State collaboration
- Enhancing the effectiveness of the Technology Upgradation Scheme (CLCS-TUS)
- Strengthening Receivable Financing Market for MSMEs
- Enhancing Effectiveness of Credit Guarantee Trust for Micro and Small Enterprises (CGTMSE) and “Greening and Gender” delivery
- Reducing the incidence of delayed payments
Why RAMP is Important for MSMEs?
MSMEs contribute a large amount to the country’s GDP. According to the official data, the contribution of the 6.3 crores strong micro, small and medium enterprise (MSME) sector in the country’s gross domestic product (GDP) dropped from 30.50 percent during the financial year 2018-19 and FY20 to 26.83 percent during the first year of the Covid pandemic 2020-21.
According to the Crisil report, more than a quarter of Indian MSMEs lost more than 3% of their market share as a result of the Covid pandemic, and half of them saw a decline in their profitability compared to the level they were at prior to the pandemic (FY20).
SBI Research estimates that India’s economy expanded by 8.7%% in FY22 to reach Rs 147 lakh crore, only 1.5% more than the pre-Covid year of FY20.
Features and Benefits of the Scheme
The RAMP program will support vulnerable communities and environmental activities while also facilitating finance, promoting the market, and creating jobs through improved collaboration with the States.
The SIPs created by States where MSMEs are highly impacted would serve as a development road map for a better MSME sector.
By enhancing the impact of current MSME programs, particularly on the competitiveness front, RAMP will address the general and COVID-related difficulties in the MSME sector.
The program will also strengthen the areas of capacity building, support, skill development, quality enrichment, technological advancement, digitization, outreach, and marketing promotion, among others, that have not received appropriate attention.
By encouraging innovation and improvement in industry standards, and practices, and by giving MSMEs the necessary technological inputs to make them competitive and self-sufficient, RAMP will complement the Atma Nirbhar Bharat mission by boosting exports, reducing imports, and promoting domestic manufacturing.
All 63 million enterprises that qualify as MSMEs will benefit directly or indirectly from the RAMP initiative, which has an influence across the country.
However, a total of 5,55,000 MSMEs are targeted explicitly for improved performance. In addition, the target market is expected to be expanded to encompass the services sector and an increase of roughly 70,500 women-owned MSMEs is also anticipated.
Policy Provider: The delivery of more efficient and cost-effective MSME interventions to boost competitiveness and company sustainability will be made possible by the increased capacity for designing evidence-based policies and programs.
Knowledge Provider: using benchmarking, sharing, and showcasing best practices and success stories from around the world,
Technology Provider: granting MSMEs access to cutting-edge technology will lead to their digital and technical transformation through cutting-edge AI, data analytics, the Internet of things (IoT), machine learning, etc.
Other Government Policies for MSMEs
The Government of India has designed various policies for the growth of MSMEs in the country.
Under the Pradhan Mantri MUDRA Yojana (PMMY) scheme, 10.03 million loans were sanctioned.
In the Union Budget of 2022-23 MSMEs sector was allocated a total of Rs. 50,000 crores for the Emergency Credit Line Guarantee Scheme (ECLGS).
For the services sector, the government introduced the Special Credit Linked Capital Subsidy Scheme (SCLCSS). The service sector’s businesses will benefit from this program’s assistance in meeting various technological standards.
The Ministry of MSME launched SAMBHAV, a national-level awareness program to push economic growth by promoting entrepreneurship and domestic manufacturing.
Union Minister for MSMEs introduced the ‘India Export Initiative’ and ‘IndiaXports 2021 Portal’ to push the export reach.
To support the regional silk industry and create jobs, the Khadi and Village Industries Commission (KVIC) constructed the first “Silk Yarn Production Center” in Odisha.
Khadi and Village Industries Commission (KVIC) launched the SPIN (Strengthening the Potential of India) scheme and built a pottery cluster under SFURTI Scheme in Varanasi to support >1,100 individuals of the marginalized potters’ community.
Article Written By: Priti Raj