Budget 2019: Here's what small businesses are saying about Nirmala Sitharaman's maiden Budget
Finance Minister Nirmala Sitharaman presented the Budget 2019 in Parliament and announced a host of measures for the MSME sector.
The first was a retail pension benefit scheme for three crore MSME shopkeepers with annual turnover less than Rs 1.5 crore. This will be under the Pradhan Mantri Karam Yogi Man Dhan Scheme, she added.
Nirmala Sitharaman also announced an allocation of Rs 350 crore this year for two percent interest subvention for GST-registered MSMEs on fresh or incremental loans. The finance minister also recapped the scheme through which GST-registered MSMEs can avail loans of upto Rs 1 crore in 59 minutes.
She said the Budget 2019 also proposes the creation of a payment platform for MSMEs to enable filing of bills and payments. She also made a host of other announcements, with a focus on traditional industries, boosting entrepreneurship in underserved sections, and more.
MSME Minister Nitin Gadkari welcomed these announcements for MSMEs in the Budget and said the ministry would raise the sector's contribution to 50 percent of the country's GDP in the next five years from the current 29 percent, and provide jobs to 15 crore people.
Gadkari added that the speciality of the Budget is that India's "small-scale and medium-scale industries have received maximum encouragement."
So what do small businesses and other MSME stakeholders think of Budget 2019's proposals? Here's what they said about some critical MSME issues:
Loans and working capital
Availability of affordable and collateral-free credit has long been a challenge facing MSMEs, and the Budget 2019 did stress, to some extent, on making working capital accessible. Besides the 59-minute loans of upto Rs 1 crore for MSMEs, Budget 2019 proposed that Public Sector Banks (PSBs) will be provided Rs 70,000 crore to boost capital and improve credit.
For Instamojo, a full-stack solutions provider for MSMEs, the Rs 1 crore,59-minute loan is a step in the right direction.
"The current gap between the demand and credit supply within the Indian MSME sector is about $230 billion. The introduction of the Rs 1 crore MSME loan brings great relief to small business owners, making easier accessibility and processing of loans through a single portal. This, in turn, will translate into stability and growth of the sector, sustain existing businesses, and birth new ones."
Sampad Swain, CEO and Co-founder, Instamojo
Sundeep Mohindru, Founder of TReDS platform M1xchange, believes the Budget 2019 "is all about enabling business growth environment for small and medium enterprises and encouraging entrepreneurial capabilities of rural India".
According to him, the involvement of NBFCs in financing through TReDS platform will bring a solution to the credit demand gap for the small and medium industrial segment in a more effective manner.
"The finance minister’s proposal to allow NBFC’s to participate in factoring transactions will give liquidity to unfinanced business on TReDS," he told SMBStory.
Pension scheme for retailers and shopkeepers
Instamojo's Sampad Swain had positive words for the proposed pension scheme for shopkeepers. He termed it a "encouraging move", adding that the Indian retail space is still majorly driven by small business owners and traders.
"[The pension scheme] not only brings a long-term life plan for these traders, but also helps towards the gradual formalising of this majorly unorganised sector," he said.
Organic foods and medicinal products maker Ele Farm Hub's Founder Sujayraj KB is happy with such ideas and looks forward to their implementation.
"Securing the future of businessmen with pensions is a welcome move which will alleviate worries of small scale investors," he said.
Sujayraj KB, Founder, Ele Farm Hub
Boosting traditional entrepreneurship
Nirmala Sitharaman proposed measures to boost SC/ST and women entrepreneurship in the country, as well as setting up hundreds of clusters and incubators to make traditional industries, especially bamboo, khadi and honey, more competitive.
Divya Jain, Co-Founder and CEO, Safeducate, believes the proposed cluster-based approach to train 75,000 skilled entrepreneurs in India "paves the way towards Digital India and Startup India, promote the development of cutting-edge and indigenous technological solutions, create high-tech jobs in India, upskill Indian professionals, and enable us to tap the ripening global market."
Divya Jain, Co-founder and CEO, Safeducate, with the team
Budget 2019 also proposed setting up a social stock change for listing NGOs and voluntary organisations, which Qtrove.com Founder and CEO Vinamra Pandiya believes is positive for entrepreneurs.
He said, "The move will empower a lot of entrepreneurs towards setting up such ventures and will see a lot of them working towards sustainability as a concept. The world is moving towards a dangerous tipping point and nature is taking its revenge, so it’s time more people join the cause of making this planet livable for the next thousands of years.”
Other focus areas
Not all proposed MSME schemes from Budget 2019 are new - a fact Ladybird Web Solution Founder Bhanu Pratap Singh Slathia pointed out. He told SMBStory, "Not all MSME schemes are new but it is shown clearly that the government is committed to the promotion of startups and MSMEs. The two percent interest subvention on loans taken by GST-registered MSMEs reduces the load on them and helps them focus on business and job creation."
Bhanu Pratap Singh Slathia, Founder, Ladybird Web Solution
Kerala-based chemical industrialist Xavier Thomas Kondody echoes this sentiment. He said: "The schemes announced for MSMEs are like old wine in new bottles, such as the 59-minute loans, cluster development schemes, Stand-Up India, MUDRA, etc. If banks are allowed to exercise their due diligence, no applications would get through. However, I wish the schemes are implemented properly through the banking sector through sincere efforts."
Other MSMEs remain optimistic and look forward to the roadmap for economic growth proposed by Budget 2019.
Piyush Khaitan, Founder and MD, NeoGrowth, a pioneer in NBFC lending, says targeting $5 trillion by 2024-25 will boost business activities in the country.
"Our customers, i.e MSMEs, are facing a consumption economy, and with the encouraging measures for boosting GDP driven by consumptions and investments, it ushers in positivity for our line of business," he said.
Piyush Khaitan, Founder and MD, NeoGrowth
Kabir Jeet Singh, Founder and CEO, Burger Singh, also believes the pro-startup and MSME Budget promises a better environment for business in India. "The government should also consider easy availability of capital and government grants for the industry, along with an extended tax holiday," he said.