New Delhi (Sputnik): India's Prime Minister Narendra Modi has launched an instant loan scheme for micro, small and medium enterprises (MSMEs). The program, that promises to approve a loan of up to 10 million rupees ($138,000) in 59 minutes, was launched amid elaborate functions across the country during the weekend.
"As we speak, somewhere in the country your entrepreneurial brother or sister is getting a loan… approved in just 59 minutes. Think, only 59 minutes. Just 59 minutes," PM Modi said while launching the scheme.
The program is being considered as an attempt to woo voters from a segment that faced massive loss due to the November 2016 demonetization of high-value currency notes and the new goods and services tax regime, which came into force in July 2017.
"The Micro, Small and Medium Enterprises (MSME) sector has witnessed two major recent shocks, demonetization and the introduction of a goods and services tax (GST). For instance, contractual labor in both the apparel and gems and jewelry sectors reportedly suffered as payments from employers became constrained after the note ban. Similarly, the GST led to an increase in compliance costs and other operating costs, as most MSMEs were brought into the tax net as over 60 percent of them were not ready for the new tax scheme," the RBI report explains.
On November 8, 2016, PM Narendra Modi announced the demonetization of large-denomination banknotes, which accounted for 86% of total currency in circulation at that time. The step created a major loss among businesses in the category, thereby creating mass unemployment in the unorganized sector. The 59 minutes MSME loan scheme is being seen as Modi's attempt to offset the negative sentiments triggered by the decision, considering that very little time is left before the general elections.