In the latest tranche of Atmanirbhar Bharat Abhiyan package, the key thrust is a huge increase in credit guarantees to MSMEs. How do such guarantees work , and how is the move expected to help MSMEs? Finance Minister Nirmala Sitharaman announced some details of the Atmanirbhar Bharat Abhiyan economic package on Wednesday. This is the second tranche of the package that includes past actions by the Reserve Bank of India as well as the first Covid-19 relief package announced during March and April. The main thrust of Wednesday’s announcements was a relief to Medium , Small and Micro Enterprises (MSMEs) in the form of a massive increase in credit guarantees to them. There was, however, very little actual fiscal outgo that was announced. In other words, instead of directly infusing money into the economy or giving it directly to MSMEs in terms of a bailout package, the government has resorted to taking over the credit risk of MSMEs should they want to remain in business. These
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