Consider the following statements with reference to 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 ₹ 15 crore and ₹ 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?
Show answer
Answer: B. Statement 1 is wrong: under the MSMED Act as revised by the 2020 notification, a medium enterprise had investment up to ₹50 crore and turnover up to ₹250 crore; ₹15 to 25 crore was never the limit. (The limits were raised again in 2025, to ₹125 crore and ₹500 crore.) Statement 2 is correct: under RBI's priority sector directions, all bank loans to MSMEs (as defined under the Act) count as priority sector lending. So 2 only.
Watch for: The MSME limits changed in 2020, so old or invented numbers can look right.
Why the other options are wrong
- A. Wrong because the medium enterprise limit given is incorrect.
- C. Wrong because statement 1 is false.
- D. Wrong because statement 2 is correct.
Source to check: Ministry of MSME notification S.O. 2119(E), 26 June 2020; RBI Master Directions on Priority Sector Lending, 2020
Answer from the official UPSC key. Written and fact-checked by AI against the official key. Spotted a mistake? Report it.