Introduction:
The Micro Small Medium Enterprises (MSME) sector deserves attention from the government in the forthcoming budget. They form the backbone of employment in India with their one-third contribution to the gross domestic product. From expanding the scope of loans under the MUDRA scheme to enhancing credit guarantees, they need all the support they can get. Besides enhancing the efficiency of their output, it can also boost consumption in the economy.
What does the MSME sector expect from the upcoming Union Budget?
The MSMEs are among the largest employers in the country and contribute significantly towards our GDP. Here are the basic expectations from MSME owners from Nirmala Sitharaman’s seventh budget as finance minister.
Digitising the Workplace:
To keep up with the growing demand for production and become a manufacturing force internationally, digitising the MSME workplace is the need of the hour. Initiatives that make funding available to adopt AI, automation, data
analytics, and advanced technology should be promoted.
Upskilling Manpower:
Digitisation of the workplace goes hand in hand with upskilling manpower. India has an abysmal rate of formally upskilling its workforce as compared to first-world nations. The Indian MSMEs are currently upskilling 10% of its workforce as opposed to 60-80% of its Western counterparts; the gap is just too wide. A decent budget allocation, subsidies, and tax breaks will help fill this gap and improve India’s global competitiveness.
Financial Support:
Affordable financing is a significant cornerstone of the MSME sector but there is an increased gap in the financing. Making support programs such as the Partial Credit Guarantee Scheme (PCGS) and Emergency Credit Line Guarantee Scheme (ECLGS) accessible can improve credit availability for MSMEs and, in turn, help more players enter the market.
Extending timelines for NPA classification:
The MSME sector runs on loan economy, but delays in payments can cause their accounts to move to the Non-Performing Assets (NPA) segment. Currently, the NPA classification timeline is payment within 90 days; however, extending the period to 180 days can allow MSME owners to prevent defaulting. This extension will help prevent short-term financial challenges and take off mounting debt pressure from MSME owners, which will, in turn, boost their credit standing and give them access to funding for further expansion.
Startup sector boost:
The ‘Make in India’ initiative by the current government has significantly pumped the startup economy, in turn providing a whole new talent pool that culminates into newer business opportunities within the MSME. The consensus from the MSME segment is to bolster the startup sector with accessible funding programs, which will boost collaboration between the private and public sectors and create a robust supply chain.
Conclusion:
With the upcoming Union Budget around the corner, MSME owners are hoping for a positive change. The government has historically introduced positive reforms for the business sector, and the ease of business has improved drastically over the years. The MSME sector is waiting to see more reforms and policy changes that can boost the business sector.
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