Modi considers cheap loans for small businesses

- Reuters, NEW DELHI

Jan 22, 2019-

Indian Prime Minister Narendra Modi is considering offering cheap loans and free accidental insurance coverage to millions of small businesses, two government sources with direct knowledge of the matter said, as he tries to placate a key voter bloc ahead of a general election due by May.

Small business groups have been critical of the Modi government in the past year after many firms were squeezed by a shock move to ban high-value currency notes in 2016, followed by a hasty implementation of a nation-wide goods and services tax (GST) that raised their compliance costs.

In a bid to win them back, and following election losses in five states last month, the government run by Modi’s Bharatiya Janata Party (BJP) recently announced GST concessions and tweaked an ecommerce policy in favour of small traders.

More measures are now being planned, said the sources, who declined to be named as the information was not public. A spokesman for the Ministry of Finance did not immediately respond to an email seeking comment.

The sources did not quantify the amount the series of measures would cost the government, as details are still being worked out.

The government is working on offering a discount of 2 percentage points on loans for businesses with annual sales of less than 50 million rupees ($701,754), the sources said, and would compensate banks for costs. Small businesses with a top credit rating can get loans from banks at about 9-10 percent, while lower-rated businesses can be charged around 13-14 percent. But only about 4 percent of the 70 million small enterprises in India have access to bank credit, said Praveen Khandelwal, secretary general of the Confederation of All India Traders.

Published: 22-01-2019 08:28

User's Feedback

Click here for your comments

Comment via Facebook

Don't have facebook account? Use this form to comment