New Delhi: India’s micro small and medium companies have high expectations from Finance Minister Nirmala Sitharaman in this year’s budget. India’s MSME sector accounts for nearly 30 per cent of the country’s GDP and is considered the second biggest employer after the farming sector.
The Finance Minister has been mindful of the crucial role played by the country’s millions of micro, small and medium enterprises that’s why in this year’s interim budget, she had said that it was an important policy priority for the government to ensure timely and adequate finances, relevant technologies and appropriate training for the micro, small and medium enterprises (MSMEs) to grow and also compete globally.
“Orienting the regulatory environment to facilitate their growth will be an important element of this policy mix,” Sitharaman had said while presenting this year’s interim budget. Ahead of the budget, the Reserve Bank of India also held a separate meeting with representatives of the MSMEs in Mumbai this Monday to hear their problems.
In her budget speech in February this year, the Finance Minister highlighted the three challenges faced by the MSME sector. These are problems of cash flow, technology adoption and training for the MSME sector. The MSME sector is hopeful that the Finance Minister will be able to address these three challenges faced by them in the upcoming budget.
For example, ahead of the budget, MSME sector representatives are demanding that the Finance Minister should include provisions for one-time expenditure for their investment into IT hardware and software so that they can increase the use of technology in managing their businesses.
Second, the industry representatives are also pressing for simplification of rules that will increase their Ease of Doing Business as plenty of statutory and regulatory compliances make it difficult for small companies to smoothly run their businesses.
Thirdly, the MSME sector is also demanding simplification of GST-related compliances as it is a difficult task for small entrepreneurs to use e-invoices, GSTN portals and e-way bills. In the last full budget ahead of the general elections, the Finance Minister has highlighted the difficulties faced by the MSME sector during the Covid period and also announced relief.
Sitharaman had announced that under the Vivad Se Vishwas I scheme, if any MSME company, failed to execute contracts during the Covid period, 95 per cent of the forfeited amount relating to bid or performance security, will be returned to them by the government and government undertakings.
“This will provide relief to MSMEs,” the FM had said. In this year’s budget, the MSME sector is seeking similar relief for availing easy credit as managing cash flow is a challenge for any small and medium company.
Moreover, the MSME sector is also looking for some relief for small and medium companies in case of supply chain disruptions as the prolonged Russia-Ukraine war has cast a shadow on the stability of global supply chains. The industry is also seeking some kind of measure from the government to reduce their cyber security risk as unlike large corporations the IT budget of small companies is not adequate to deal with such challenges.
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