The lending potential of Indian Micro, Small, and Medium Enterprises’ (MSMEs) can reach $3 trillion by FY23, said the government’s Chief Economic Advisor, Dr V Anantha Nageswaran. The CEA was speaking at the Global Fintech Festival (GFF) held in Mumbai yesterday.
The third edition of GFF is a four-day event organised and presented by the Department of Economic Affairs, Ministry of Finance, along with the Reserve Bank of India, and other government bodies.
The MSME sector contributes about 30 per cent to India’s GDP, 45 per cent to India’s exports and is also the second largest employer of workforce after agriculture, as per data shared by the Micro, Small, and Medium Enterprises Ministry. The sector was brought to its knees during the COVID-19 pandemic, with several MSMEs reporting revenues declining by 30-40 per cent. To bail the sector out of the crisis, the Indian government introduced the Rs 20-lakh-crore Aatmanirbhar Bharat Stimulus Package in May 2020.
Digital lending is being seen as a key component that will not just financially empower the small businesses but also digitally enable them.
According to Nageswaran, MSME lending can bring the next wave of growth in the Indian fintech sector. Moreover, the cash flow lending to MSMEs, which will drive this growth, will be majorly done using Account Aggregator, UPI and Credit Enablement Network (OCEN), he noted.
The economic advisor also pointed out that the MSME lending, which he expects to reach $3 trillion next year, will be based on Goods and Services Tax (GST) invoices and bank statements made available on account aggregators and banks adopting OCEN.
In the same session, the CEA also highlighted that India is among the fastest growing fintech markets This market, which was pegged at a market size of $31 billion in 2021, is slated to reach $1 trillion by 2030, he revealed.
He also added that India’s economy is poised to grow by more than 7 per cent in this decade. His statement comes days after India became the fifth largest economy in the world surpassing the UK.
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