Loans after the Floods: Too Late for MSMEs?

The Government’s announcement of the RE-MSME PLUS loan scheme has raised a critical question: can credit-based relief, delayed until 2026, genuinely rescue enterprises already devastated by Cyclone Diwah? While concessional loans at 3 percent interest sound attractive, many disaster-hit micro and small businesses argue that loans alone cannot replace destroyed assets or lost markets.

Out of the 13,698 affected businesses, more than 10,000 are micro and small enterprises, many of which lack the cash flow to service even low-interest debt. For them, immediate grants, moratoriums on existing loans, and insurance payouts are more urgent than fresh borrowing. Economists warn that rolling multiple schemes into one may improve efficiency, but without faster delivery and simpler access, the relief risks remaining largely on paper.

Cyclone Diwah has revived an old debate: should disaster recovery for MSMEs rely on loans, or should the State finally invest in a comprehensive, grant-based disaster resilience framework?

 

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