UPSC Prelims 2023 – Question 71

Q71. Consider the with reference to the India: 

1. According to the ‘Micro, Small and Medium Enterprises Development (MSMED) Act, 2006’, the ‘medium enterprises’ are those with investments in plant and machinery between Rs 15 crore and Rs 25 crore. 
2. All bank loans to the Micro, Small and Medium Enterprises qualify under the priority sector. 

Which of the statements given above is/are correct? 

1. 1 only 

2. 2 only 

3. Both 1 and 2 

4. Neither 1 nor 2 

Correct Answer: Option (b) 

• As per the new definition and criterion of MSMEs which came into effect from 1st July 2020. 
• The definition of Micromanufacturing and services units has been increased to Rs. 1 Crore of investment and Rs. 5 Crore of turnover. 
• The limit of small units has been increased to Rs. 10 Crore of investment and Rs 50 Crore of turnover. 
• The limit for medium Enterprises has been changed to Rs. 50 Crore of investment and Rs. 250 Crore of turnover. 
• Hence, statement 1 is not correct. 
• In terms of Master Direction on ‘Priority Sector Lending (PSL) – Targets and Classification’ dated September 4, 2020, all bank loans to MSMEs conforming to the conditions prescribed therein qualify for classification under priority sector lending. Bank loans to Micro, Small, and Medium Enterprises (for both manufacturing and service sectors) engaged in providing or rendering of services and defined in terms of investment in equipment under the MSMED Act, 2006, irrespective of loan limits, are eligible for classification under priority sector, w.e.f. March 1, 2018. Hence, statement 2 is correct. 

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