BUDGET 2018: The fifth and perhaps the most important union budget of the Modi government will be presented on February 1 by the finance minister Arun Jaitley. The budget 2018 holds one an importance as it will be presented before the 2019 Lok Sabha Elections take place. Among many factors to keep in mind for Arun Jaitley, FICCI, in its pre-budget 2018 memorandum says that there is a need to lower the cost of finance for the industry – large as well as MSMEs –which is currently very high. As per FICCI’s Business Confidence Survey, the average lending rates of banks are around 12%. The RBI should consider cutting policy rates by at least 100 bps.
FICCI also wants the Modi government to keep a specific tab for the MSME and startups in the union budget 2018. FICCI wants Modi government should facilitate setting up of ‘Business Support Centres’ (probably within the District Industries Centres) to assist MSME registration, responding to all their queries, resolving their doubts and assisting them in complying with all processes. FICCI also expects the government to revise the existing definition of MSMEs to include turnover/ employment criteria and have a mechanism to revise the same every three years.
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FICCI also expects that in the union budget 2018, enhancing access to finance for MSMEs is the key to go. This can be achieved by promoting trade receivables and discounting systems (TReDS) amongst MSMEs through a planned marketing campaign. Additionally, providing an incentive for the usage of TReDS platform. Modi government can also consider creating an insurance scheme for receivables financed on TReDS. What government can do more is to encourage wider a participation on TReDS platform. While Modi government has recently announced that PSUs will have to register on TReDS, larger NBFCs may also be encouraged to register on the TReDS platform as this will make the platform even more active.
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FICCI knows that the government has been very responsive to industry’s concerns related to Goods and Services Tax. It should continue to address all pending issues related to the implementation of GST, especially to ease the compliance requirements related to GST for MSMEs.