Budget 2020 with Zee: Top 5 expectations that MSMEs want FM Nirmala Sitharaman to deliver on
Budget 2020 with Zee: MSMEs are also looking at Sotharaman with great hope as she is expected to make some big announcement for job creation.
Budget 2020 is just a day away and India Inc is looking at Finance Minister Nirmala Sitharaman and wondering about the kind of proposals she will announce to boost the national economy and the various sectors. The Micro, Small and Medium Enterprises (MSMEs) are also looking at her with great hope as the government is expected to make some big announcement for job creation and MSMEs being the largest industrial job-creating sector is expecting to get some extra benefits because of that.
Speaking on the MSMEs expectations from Budget (#BUDGET2020ZEE) 2020 Ritesh Jain - Co-Founder at FlexiLoans.com said, "Considered the backbone of the economy, the MSME sector contributes over 30% to GDP and employs over 40% of the workforce. With Budget 2020 round the corner, MSMEs are strongly anticipating measures that will boost growth in the country."
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Asked about the top 5 Budget 2020 Expectations of the MSMEs, Jain listed the following:
1] Provision of Distressed Asset fund & Fund of Funds: The government is reportedly planning to announce Rs 5,000cr worth of distressed asset fund, which will cater to any small business facing a liquidity crunch. We believe that this measure will prove as a catalyst in enabling liquidity in this sector, and could even call for a 6.5% growth in GDP.
Furthermore, there are talks of a Fund Of Funds being created, worth Rs 10,000cr, which would be dedicated to the corporations and private equity firms that are interested in investing in the MSME sector, on modified term sheets developed by SIDBI. It would be advantageous to have this measure in place, to encourage innovation in production structures and term-sheets.
2] Introduction and implementation of a ‘Payment Act’: At present, there is MSME Samadhaan (a delayed payment monitoring system), which is placed for the sole purpose of filing cases that are related to delayed payments.
If a Payment Act were to be in place, which would mandate timely payments by the Government and other large companies, then we are certain that this would solve the cash-flow problems of small and medium businesses, at large.
3] Flexibility in GST compliance norms and GST refunds: We think that the rationalization of GST will also do a world of good to this sector. The government should consider giving some relaxation on GST, especially in the manufacturing sector, and even dole out some incentives for filing GST returns on time. GST refunds are also proving to be bottlenecks, affecting the working capital available with SMEs to operate a business, and faster processing of these refunds would be a great relief.
4] Empowerment of emerging Micro-entrepreneurs: According to FISME (Federation of Indian Micro and Small & Medium Enterprises), majority of the small businesses are facing challenges of remaining small, due to lack of capital, and are unable to produce matching collateral securities as they grow, in the ratio of the increasing funds they need.
Lack of access to skilled labor, capital, power supplies, and infrastructure has rendered many micro-enterprises immobile. Budget 2020 could introduce policies or allocate funds for these micro-entrepreneurs, enabling them to grow.
5] Increasing scope and fund allocation of CGTSME scheme: Initiatives such as the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) that facilitates funding without collateral security or third party guarantee for loans to MSMEs, are gradually fueling the growth of this sector, and the country as a whole. The government should increase the fund allocation to CGTSME and increase the guarantee limits under the scheme to increase lending to the MSME sector by banks and NBFCs.
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