Budget 2021: 10 things the Indian MSME ecosystem is expecting
According to Prime Minister Narendra Modi, the vision of an Aatmanirbhar Bharat rests on the twin principles of scale and standards.
"Today, the world is our market. The people of India have the ability. The world trusts India as a nation with credibility," he said in a LinkedIn post in early January 2021, asserting that India wanted to make good quality products that are admired globally.
To this end, Finance Minister Nirmala Sitharaman has promised a "never before" like Union Budget to steer the pandemic-battered economy and push for growth.
Addressing the CII Partnership Summit 2020, she said, "Send me your inputs so that we can see a Budget which is a Budget like never before, in a way. 100 years of India wouldn't have seen a Budget being made post-pandemic like this.”
With expectations sky-high, especially for the badly-hit MSME sector, here’s what the sector’s stakeholders expect from the Union Budget 2021.
Revise GST rates for IT products - Logesh Velusamy, Founder and CEO, Effitrac
In the Budget, I would like to see a change in GST rates for IT products. MSMEs have to pay 18 percent GST to adopt digital solutions. Doing away with this or at least bringing it down considerably will reduce the cost of doing business and will propel tech adoption.
Revisiting charges for digital payments is important as we will see greater adoption of such payment methods, which will lead to improved efficiency and greater transparency for MSMEs.
Empower agencies to allow MSME growth - Ragesh Keisham, Founder, CC Tea
I expect the Union Budget to look at how the government can empower different agencies across the country to have access to funds, and allow SMEs to operate and grow.
For instance, the North East Venture Fund (which is under the DoNER Ministry) hasn’t been able to utilise the allocated budget due to the funding criteria not being conducive to businesses in the North East. These funds, if properly implemented, it can help MSMEs in the region to expand, grow and create employment for local people, and develop the economy in general.
Bring Ayurveda under Ayushman Bharat - Sajikumar, Founder and MD, Dhathri Ayurveda
I hope the government will bring Ayurveda under the Ayushman Bharat scheme. Ever since the onset of the pandemic, the need for improving immunity has become imperative, and people are turning to Ayurvedic brands and MSMEs, not just for chronic illnesses, but also for immuno-modulatory treatments.
By bringing Ayurveda under the Ayushman Bharat scheme, people across the country can avail this facility, and consequently, propagate preventive care to considerably bring down the overall healthcare expenditure over a period of time.
Revise GST rates on services - Sandip Chettri, COO, TradeIndia
Traders bodies are finding GST a complicated taxation system. The Budget should simplify this tax regime. Further, there is a demand for GST rates to be cut from 18 percent to 5 percent on professional services like CA, HR, marketing, supply chain management, etc, as these services are widely used by MSME units.
MSMEs also favour the removal of GST under reverse charge and on services procured from overseas. These issues need to be addressed urgently.
Increase consumption, revive demand - Milan Thakkar, CEO, Walplast
One of the ways to neutralise the impact of disruption is to boost consumption in the economy by creating demand and increasing disposable surplus. This could be achieved by reducing personal taxes and incentivising consumption.
Tax revenues can also be balanced by increasing taxes on businesses which have got windfall gains during the pandemic, such as those in the capital market, OTT, or IT space.
Don’t ignore large enterprises working with MSMEs - Shivendra Nigam, CFO, Cantabil
The government has taken a lot of appreciable initiatives to secure MSME interest. However, it must also focus on the medium and large enterprises dealing with MSMEs.
GST returns filing dates should be the same for all categories of taxpayers. Large taxpayers are regularly facing working capital pressure due to non-filing of monthly returns and blocking of input credit.
Boost rural enterprises - Vivek Bindra, Founder, Bada Business
Through the Budget, the government must find ways to boost a wave of new micro-enterprises in rural India to create more employment opportunities outside agriculture.
Building the entrepreneurial capability of rural youth through business training, easing the norms to start businesses, and creating a fast loan disbursement mechanism for micro-enterprises in villages, can help infuse new entrepreneurial energy into villages.
Digitise, decriminalise, simplify compliance - Neeraj Dubey, Partner, Corporate Law, Singh and Associates
First, the government should take five to seven key processes like EPF, tax, labour compliances, and digitise them from start to finish. Since about 14 percent of the compliance burden has criminal penalties associated with it, the government should remove criminal penalties for minor non-compliance and offences.
It should also reduce duplication in forms and minimise interaction with bureaucracy. The government is also expected to bring greater focus to nano and mass enterprises, and expand deployment channels to include NBFCs and fintech firms.
Weed out fake bills and invoices - Sumit Jaiswal, Founder, Highflow Industries
Though sales have improved, fake bills and invoices are still a major challenge. It becomes impossible to track the right person from a list of suppliers.
The government needs to send local officials to ascertain whether a GST-registered company actually exists or not. This was the procedure before GST, but it has been removed after GST implementation, intending to boost the ease of doing business.
Ensure more credit flow to MSMEs - Rajesh Gupta, Co-founder and Director, Busy Infotech
I expect the government might introduce certain schemes, among other incentives, specific to MSMEs, which would provide interest subvention for small-size MSME loans, resulting in more liquidity and credit inflow in the ecosystem.
I also hope the government ensures more credit flows to MSMEs in the forthcoming Budget. If such expectations are fulfilled, this Budget could be a turning point for the MSME sector.
For YourStory's multimedia coverage of Budget 2021, visit YourStory's Budget 2021 page or budget.yourstory.com
Edited by Kanishk Singh
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)