In 2016, demonetisation dealt a severe blow to the struggling Micro, Small and Medium Enterprises (MSMEs) sector, which supports a big chunk of population. And the acknowledgement came two years later, from the country’s central bank after a study. In 2018, the Reserve Bank of India (RBI) said that the (MSMEs) have been adversely hit by the Goods and Services Tax (GST) roll-out and demonetisation.
And just over two years later, pandemic dealt another blow to it. Wave after wave, its share shrunk, significantly impacting the overall credit of the sector.
It won’t be wrong to say that MSMEs are the backbone of the economy. With 63 million units, the sector provides employment to 111 million people, making it the largest source of employment after the agriculture sector.
Besides, it contributes to 30% of India’s GDP, 50% of exports and 95% of industrial units. And for inclusive growth, this sector cannot be ignored.
Now, the sector is looking towards the government for the breather.
Economic observers too are looking for an inclusive Budget from Union Finance Minister Nirmala Sitharaman on February 1.
Naushad Forbes, the Co-Chairman of Forbes Marshall told Business Standard in a recent interview about what makes an inclusive budget.
A recent survey of 150 MSMEs by consulting firm MSMEx revealed that four out of 10 businesses changed their business models to survive the pandemic while 50% of the respondents said government schemes did not help them with sustaining their business through the pandemic.
As part of pre-Budget consultations, representatives from the ruling BJP and its state units sought support from Sitharaman for the sectors that have been the worst affected by the pandemic. These include hospitality, leisure, tourism and other contact services.
Some concerns that were raised during the interaction include lack of availability of credit, rising cost of raw materials and base metals, and targeted assistance to stressed sectors.
We spoke with BJP’s national spokesperson and economic cell head Gopal Krishna Agarwal on what he’s expecting from the Budget for the informal sector.
One of the major demands of the sector is the extension of the Emergency Credit Line Guarantee Scheme beyond March 2022.
The scheme was launched in 2020 to help MSMEs tide over the crisis and its scope was expanded last September. Since its launch, top up loans worth Rs 3 lakh crore have been sanctioned from ₹4.5-lakh crore limit under the scheme. These loans are 100% guaranteed by the Centre and involve no processing fee.
A cut in corporate taxes and Production-linked Incentive Schemes worth Rs 2.75 trillion introduced last year have largely benefitted big companies. The MSME industry is looking to get a similar boost in the Budget.
Watch video
Dear Reader,
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.
Digital Editor
RECOMMENDED FOR YOU