By Pushkar Mukewar, Co-Founder and CEO, Drip Capital
After being hit by the Covid-19 pandemic, the MSME sector is seeing a fast recovery owing to various measures like government schemes such as ECLGS, SRI fund, etc., aimed at infusing much-needed funds in the MSME segment to meet the pent-up demand.
Access to funds has played a critical role in helping the MSME sector remain afloat during the pandemic. For instance, in FY21, the loan disbursals to MSMEs stood at US$ 128.06 Bn, a 40% increase compared to US$ 91.66 Bn in FY20. Another notable factor contributing to MSME growth is digitization. As per the ASSOCHAM-CRISIL report, though banks still dominate the MSME lending book, MSMEs have started exploring digital lending platforms, with 72% of payments done digitally compared to 28% of cash transactions.
The sector is expected to rebound with a 15% to 17% growth in revenues for the financial year ending 2022, amid the country’s economic recovery and an increase in consumer demand. Access to working capital and digitization will ensure the forecasted growth is achieved.