MSMEs welcome revamped credit guarantee scheme, call Budget well-balanced
The government has allocated Rs 22,138 crore to the MSME sector and announced four key measures to support MSMEs. Here is how the industry is reacting.
Calling MSMEs “the growth engines of our economy”, Finance Minister Nirmala Sitharaman, during her Budget 2023 speech, proposed an allocation of Rs 22,138 crore to the MSME sector, which is higher than the revised Rs 15,628 for the current fiscal year.
Another big announcement for the sector was the infusion of Rs 9,000 crore into the credit guarantee scheme. While this announcement was made during the last Budget itself, the amount was not disclosed then. Other important announcements included an increase in presumptive taxation limits, the launch of the PM Vishwakarma Kaushal Samman (VIKAS) scheme for local artisans, and setting up of an entity of DigiLocker for online document sharing and storage by MSMEs and other businesses.
In addition to this, FM Sitharaman announced that the government will return 95% of the forfeited amount to MSMEs that were not able to execute contracts because of the coronavirus outbreak.
SMBStory takes a look at how the MSME sector and its stakeholders from across the country are reacting to the Union Budget.
Many positive steps, but success depends on implementation: Sandip Chhetri, CEO, Trade India
Sandip Chhetri, CEO, Trade India
The allocation of funds for credit support will help MSMEs access finance at lower interest rates and improve their ability to invest in growth.
The government’s push towards digitisation is also commendable with a new scheme to provide financial assistance for the adoption of technology and automation. The measures to ease the process of doing business will help MSMEs operate more efficiently and effectively.
The outlook is optimistic for the big picture and the success will now hinge on effective implementation.
FM lived up to the promise: Ratish Pandey, business coach
Other than the revamping of the credit guarantee scheme, the focus on bringing artisans into a formal business space under the PM Vikas Scheme and encouraging women’s entrepreneurial spirit is a step in the right direction. The Budget could have also focused on the increasing interest rates that are adding to the burden of running business.
A well-balanced approach: Ravi Saxena, Founder and CEO, Wonderchef
After the pandemic shock, the MSME credit guarantee scheme was one of the most important instruments that helped the MSMEs across the country regain their feet. It will further accelerate the recovery of the MSMEs and put them on the path of growth. The PM Vikas scheme will help the country preserve its cultural legacy and also provide employment to thousands of people, especially in rural areas. The increase in the limit of presumptive tax will help the MSMEs better manage their operating cash.
Startups to benefit from expansion and extension of tax incentives
Number of MSMEs will increase: Vipul Verma, Executive Vice President, Wadhwani Advantage
Additional infusion into the credit guarantee outlay will help increase the number of MSME enterprises in the formal financial ecosystem. The impact will be more notable in some geographies where the potential to grow the number of MSMEs is substantially higher.
Will simplify access to finance: Harshvardhan Lunia, Founder and CEO, Lendingkart
Harshvardhan Lunia, CEO and Co-founder of Lendingkart Technologies.
It is great to see the acknowledgment of the importance of entrepreneurship for India’s economic development.
With a big push to Make in India and initiatives like PM Vishwakarma Kaushal Samman, DigiLocker for MSMEs, and PAN as a common identifier, the Budget surely aims at simplifying and streamlining access to finance.
A pro-MSME Budget: Saket Gaurav, Chairman and Managing Director, Elista and TeknoDome.
The move to reduce the custom duty on open cells of TV panels to 2.5% will make smart TV’s an accessible commodity. This move will not only help strengthen the ‘Make in India movement’ but will also empower companies who want to ‘Make in India’ for the world and compete with the volatile international panel market. This Budget is also a pro-MSME Budget. India has jumped in its rank of ease of doing business, and the current provisions to reduce more than 39,000 compliances will further help the cause and enable MSMEs to scale operations.
Resonates with the aspirations of citizens: Raja Debnath, Co-founder and CEO of Veefin
The revamped scheme is likely to boost public and private sector banks to pursue SCF (supply chain finance) with vigour and increase access to formal credit channels in the MSME sector, which still averages around 8%.
Additionally, the introduction of Digilocker for MSMEs will support them by easing the process of digital application of credit and digitising the saving of documents. Some other key measures that will boost the confidence of the financial ecosystem and its players include the setting up of the National Financial Information Registry and the public consultation on regulation-making and subsidiary directions.
Edited by Megha Reddy