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5) For MSME sector, access to credit is one of the most significant challenge amongst the several challenges that the sector faces. Analyze issues related to credit availability for MSME sector and the role government is playing?(250 words)

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Topic – Indian economy : Issues

5) For MSME sector, access to credit is one of the most significant challenge amongst the several challenges that the sector faces. Analyze issues related to credit availability for MSME sector and the role government is playing?(250 words)

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Why this question

This article discusses the issues plaguing MSME sector with an in depth analysis of issues related to credit availability for MSMEs. In the backdrop of IL&FS crisis questions have been raised over the credit worthiness of MSMEs as well as the availability of credit for them. This question would help you prepare this topic in detail.

Key demand of the answer

The question expects us to list the various issues plaguing MSME sector and explain in greater depth the situation with respect to credit availability for MSMEs , the issues plaguing credit availability for the , and analyze the decision of the government to improve their situation. We need to provide a holistic view of the situation and discuss what needs to be done in conclusion.

Directive word

Analyze – When asked to analyze, you  have to examine methodically the structure or nature of the topic by separating it into component parts and present them as a whole in a summary.

Structure of the answer

Introduction – Highlight the importance of MSME sector for the economy.

Body

  • List the various issues plaguing MSME sector such as poor infrastructure etc. Explain the problem of credit availability for the sector.
  • Discuss why such issues are being faced – the fact that banks are ill equipped, general problems with the economy, the problem with NBFC sector which are the major lenders to this sector etc
  • Discuss the steps taken by the government to address the situation and analyze how effective they are going to be

Conclusion – highlight that MSME sector need attention because of their immense significance for the economy and discuss way forward.