SRINAGAR: Credit support to micro, small and medium enterprises in Jammu and Kashmir has expanded steadily over the last five years, with thousands of units accessing collateral-free loans and employment-linked subsidies, even as the Union government has acknowledged a massive national credit gap in the MSME sector.
In a written reply to the Rajya Sabha on December 15, 2025, the Ministry of Micro, Small and Medium Enterprises said the overall credit gap for MSMEs across India was estimated at between Rs 20 trillion and Rs 25 trillion as of June 2019, based on an RBI-appointed expert committee’s assessment. The ministry said a range of policy measures had been rolled out to bridge this gap, including credit guarantees, subsidised loans, equity infusion and special schemes for artisans and informal enterprises.
Data placed before Parliament shows that Jammu and Kashmir has been a significant beneficiary of two major central schemes: the Credit Guarantee Scheme for Micro and Small Enterprises and the Prime Minister’s Employment Generation Programme.
Under the Credit Guarantee Scheme, Jammu and Kashmir saw the number of guarantees approved rise from 21,371 in 2020–21 to 38,352 in 2021–22 and further to 51,431 in 2022–23. In 2023–24, 53,295 guarantees were approved, before marginally declining to 47,201 in 2024–25. The value of guarantees approved in the Union Territory increased consistently over the period, from Rs 714 crore in 2020–21 to Rs 1,295 crore in 2021–22, Rs 1,808 crore in 2022–23, Rs 2,415 crore in 2023–24 and Rs 2,816 crore in 2024–25.
Parallel to this, Jammu and Kashmir recorded large-scale assistance under the Prime Minister’s Employment Generation Programme, which provides margin money subsidy for setting up new micro enterprises. In 2020–21, 8,575 units were assisted in the Union Territory with margin money support of Rs 18,306.28 lakh. This jumped sharply to 21,648 units in 2021–22 with assistance amounting to Rs 46,713.54 lakh. In 2022–23, support was extended to 12,023 units with margin money of Rs 23,993.89 lakh. The number rose again to 15,065 units in 2023–24, backed by Rs 28,249.88 lakh, before settling at 9,863 units in 2024–25 with margin money support of Rs 23,940.66 lakh.
The ministry told Parliament that these interventions form part of a broader policy push to improve credit flow to MSMEs, including the Emergency Credit Line Guarantee Scheme launched during the Covid-19 pandemic, the Self-Reliant India Fund for equity infusion, the PM Vishwakarma scheme for traditional artisans, and the Udyam Assist Platform aimed at bringing informal enterprises into the formal financial system.
Ladakh, which is listed separately in the data, shows a smaller but gradually expanding footprint of MSME credit support. Under the Credit Guarantee Scheme, the number of guarantees approved in Ladakh rose from 110 in 2020–21 to 205 in 2021–22, 467 in 2022–23, 637 in 2023–24 and 709 in 2024–25. The value of guarantees increased from Rs 12 crore in 2020–21 to Rs 23 crore, Rs 44 crore, Rs 84 crore and Rs 98 crore respectively over the five-year period.
Under PMEGP, Ladakh recorded assistance to 281 units with margin money of Rs 1,168.41 lakh in 2020–21. This rose marginally to 295 units in 2021–22 with Rs 1,182.31 lakh, dipped to 91 units in 2022–23 with Rs 376.09 lakh, and then climbed to 122 units in 2023–24 with Rs 584.66 lakh and 135 units in 2024–25 with Rs 639.68 lakh.
The government said transfers of credit support are being monitored closely and reiterated that multiple schemes are operating in tandem to address structural credit constraints faced by MSMEs, even as the scale of the national credit gap remains substantial.
Besides, the Ministry of MSME also cited Reserve Bank of India–reported data on credit disbursed by commercial banks to MSMEs, which it said reflects the actual flow of institutional finance to the sector over the last five years. Unlike guarantee approvals or subsidy-backed schemes, this dataset captures direct lending by scheduled commercial banks and is treated by policymakers as the clearest indicator of on-ground credit absorption by micro, small and medium enterprises.
It was Rs 9771.90 crore in 2020-21, Rs 9003.40 in 2021-22, Rs 8410.96 crore in 2022-23, Rs 16886.94 crore in 2023-24 and Rs 17771.01in 2024-25.
Officials said the RBI figures show that bank lending to MSMEs in Jammu and Kashmir has expanded steadily in the post-2020 period, coinciding with a sharp rise in credit guarantees and PMEGP-backed enterprises in the Union Territory. The government’s assessment suggests that guarantee cover under CGTMSE and demand generated through PMEGP has helped improve the risk appetite of banks, particularly for micro and small units operating in trade, services, tourism, handicrafts and small manufacturing clusters across the Valley and the Jammu region.
However, the Centre reiterated that the overall MSME credit gap remains structurally large, estimated by an RBI-appointed expert committee at between Rs 20 trillion and Rs 25 trillion nationally as of June 2019. In regions such as Jammu and Kashmir, where enterprise sizes are smaller and collateral availability is limited, dependence on policy-backed instruments remains higher than in industrialised states, even as bank credit volumes rise.
For Ladakh, the government said RBI data similarly reflects gradual improvement in formal credit access, though absolute lending volumes remain modest due to the small enterprise base and challenging geography. Here too, credit guarantees and PMEGP-linked lending continue to play a disproportionately important role in crowding in bank finance.
The Ministry said it continues to track commercial bank MSME lending, guarantee utilisation and subsidy-linked enterprise creation together, arguing that no single dataset captures the full credit picture. The combined reading of RBI credit data, CGTMSE guarantees and PMEGP unit creation, it said, is being used to recalibrate future interventions for Jammu and Kashmir and Ladakh, where enterprise growth is closely tied to employment generation and local economic stability.
