RAMP Scheme for MSMEs

• 01 Apr 2022

For Prelims: RAMP Scheme, KV Kamath Committee, PMEAC, Ministry of Micro, Small and Medium Enterprises (MoMSME)

For Mains: Importance of MSME in the Indian Economy and related Schemes

Why in News?

Recently, the Union Cabinet approved the “Raising and Accelerating MSME Performance” (RAMP) scheme which would commence in FY 2022-23.

• It is in line with the recommendations made by U K Sinha Committee, KV Kamath Committee and Economic Advisory Council to the Prime Minister (PMEAC).
  • The Reserve Bank of India had constituted an ‘Expert Committee on Micro, Small and Medium Enterprises’ under the Chairmanship of Shri U K Sinha in 2019 to suggest long-term measures for the economic and financial sustainability of the MSME sector.
• The scheme was announced by the finance minister in the Union Budget 2022-23.

What is the RAMP Scheme?

• About:
  • It is a World Bank assisted Central Sector Scheme, supporting various CoronaVirus Disease 2019 (Covid) Resilience and Recovery Interventions of the Ministry of Micro, Small and Medium Enterprises (MoMSME).
• Aimed at:
  • Improving access to market and credit
  • Strengthening institutions and governance at the Centre and State
  • Improving Centre-State linkages and partnerships
  • Addressing issues of delayed payments and greening of MSMEs
• Components:
  • Important component of RAMP is preparation of Strategic Investment Plans (SIPs), in which all states/UTs will be invited.
    • The SIPs would include an outreach plan for identification and mobilisation of MSMEs under RAMP, identify key constraints and gaps, set milestones and project the required budgets for interventions in priority sectors including renewable energy, rural & non-farm business, wholesale and retail trade, village and cottage industries, women enterprises etc.
  • The overall monitoring and policy overview of RAMP would be done by an apex National MSME Council.
    • The council will be headed by the Minister for MSME, including representation from various Ministries and supported by a secretariat.
• Funding:
  • The total outlay for the scheme is Rs. 6,062.45 crore out of which Rs. 3750 crore would be a loan from the World Bank and the remaining Rs. 2312.45 crore would be funded by India.
• Implementation Strategy:
  • Funds would flow through RAMP into the Ministry’s budget against Disbursement Linked Indicators (DLIs) to support ongoing MoMSME programmes, focusing on improving market access and competitiveness.
  • The disbursement of funds from 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 effectiveness of 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

How will this Scheme be Beneficial?

• Address Challenges in the MSME Sector:
  • The RAMP programme will address the generic and Covid related challenges in the MSME sector by way of impact enhancement of existing MSME schemes, especially, on the competitiveness front.
• Address inadequately Addressed Blocks in MSME:
  • The programme will bolster the inadequately addressed blocks of capacity building, handholding, skill development, quality enrichment, technological upgradation, digitization, outreach and marketing promotion, amongst other things.
• Generate Employment:
  • RAMP programme, through enhanced collaboration with States, will be a job-enabler, market promoter, finance facilitator, and will support vulnerable sections and greening initiatives.
• Usher in Larger Formalization:
  • In States where the presence of MSMEs is on the lower side, the programme will usher in larger formalization resulting from the higher impact of the schemes covered under RAMP.
  • The SIPs developed by these States would act as a roadmap for the development of an improved MSME sector.
• Complement the Atmanirbhar Bharat Mission:
  • RAMP will complement the AtmanNirbhar Bharat mission by fostering innovation and enhancement in industry standards, practices and providing the necessary technological inputs to the MSMEs.

What is the Significance of MSMEs in the Indian Economy?

• About:
  • They are the growth accelerators of the Indian economy, contributing about 30% of the country’s Gross Domestic Product (GDP).
  • In terms of exports, they are an integral part of the supply chain and contribute about 48% of the overall exports.
  • MSMEs also play an important role in employment generation, as they employ about 110 million people across the country.
  • Interestingly, MSMEs are intertwined with the rural economy as well, as more than half of the MSMEs operate in rural India.
• Related Schemes:
  • MSME Innovative Scheme
  • Prime Minister’s Employment Generation programme (PMEGP)
  • Scheme of Fund for Regeneration of Traditional Industries (SFURTI)
  • A Scheme for Promoting Innovation, Rural Industry & Entrepreneurship (ASPIRE)
  • Interest Subvention Scheme for Incremental Credit to MSMEs
  • Credit Guarantee Scheme for Micro and Small Enterprises
  • CHAMPIONS portal

UPSC Civil Services Examination, Previous Year Questions (PYQs)

Q. Which of the following can aid in furthering the Government’s objective of inclusive growth? (2011)

1. Promoting Self-Help Groups
2. Promoting Micro, Small and Medium Enterprises
3. Implementing the Right to Education Act

Select the correct answer using the codes given below:

(a) 1 only
(b) 1 and 2 only
(c) 2 and 3 only
(d) 1, 2 and 3

Ans: (d)

• Inclusive growth is a concept that advances equitable opportunities for economic participants during economic growth with benefits reaching every section of society.
• Promoting Self-Help Groups, MSMEs, and implementation of the Right to Education Act, all aid in furthering inclusive growth.

Source: PIB