62% of MSMEs disappointed with budget 2023: CIA survey

Ease of doing business for MSMEs: 76 per cent of respondents claimed they are not making profits currently in business while the business performance for 33 per cent declined in the past five years, the survey noted.

Written by Sandeep Soni

February 15, 2023 19:39 IST

cia, consortium of indian associations, msme survey, small business survey, ke raghunathan, covid, budget 2023, nirmala sitharaman

To mitigate the challenges, the survey report suggested the government to exempt MSMEs from statutory compliances, penal actions, and litigation.

Ease of doing business for MSMEs: A post-budget survey by trade associations representative Consortium of Indian Associations (CIA) on Wednesday said 62 per cent of the respondents were disappointed with the union budget 2023 unable to meet their expectations while only 8 per cent were happy and 5 per cent were very happy with the announcements made with respect to MSMEs and entrepreneurs. The survey covering 1,08,500 MSMEs — including manufacturers, service providers, self-employed and exporters as members of 25 trade associations and members of CIA — carried out from February 2 to February 8 said that 82 per cent of the respondents also demanded a separate ministry for micro enterprise “for better concentration and support.”

Moreover, 76 per cent of respondents claimed they are not making profits currently in business while the business performance for 33 per cent declined in the past five years or was stagnant for 25.2 per cent of the respondents.

Also read: What MSMEs got out of Budget 2023? Here are 7 key announcements by FM Nirmala Sitharaman

“It is very important for the policymakers to look into the needs of MSMEs carefully, analyse them deeply and implement them immediately. The survey highlights the pain points of entrepreneurs. If such a large number of entrepreneurs are not able to make profits, we must understand they will not sustain for a long time,” KE Raghunathan, Convenor, CIA told FE Aspire.

In terms of challenges, bank finance was an issue for 79 per cent of the respondents, payment receipts-related concerns was a problem for 70 per cent, 40 per cent noted raw material sourcing as an issue while 52 per cent cited statutory compliances as a challenge and 38 per cent claimed problems related to manpower sourcing.

Among other major findings of the survey were:

79 per cent of the respondents are expected to reduce or wait & watch or see no change in their employee strength this year
Only 21 per cent felt the government supported MSMEs adequately during Covid
59 per cent felt the reclassification of MSME norms has not been done properly

Also read: Budget 2023-24 gives a boost to fund-starved sectors: MSME Secy

To mitigate the challenges, the survey report suggested the government to exempt MSMEs from statutory compliances, penal actions, and litigation. Also, it asked for protection for MSMEs from the high-interest burden, price wars, high cost of raw materials, losing employees, penalties, and late fees.

The survey report also sought support in the form of liberal loans, clearing off the pending dues, offering moratorium with interest waiver, OTS (one-time settlement) for those who want to windup and restart, exemption from capital gain tax for those selling their factory premises to repay loans or into business or for furthering diversification and not declaring non-performing assets for a year.

“We hope the report is a scanning of the entrepreneurs’ situation in India and that it helps policymakers to come out with a viable alternative path,” Raghunathan added.

Meanwhile, among the key MSME-related announcements made by finance minister Nirmala Sitharaman in her budget this year were Rs 9,000 crore infusion into the credit guarantee scheme, expanding turnover limit from Rs 2 crore to Rs 3 crore for micro units to opt for presumptive taxation, allowing for deduction for expenditure under the Income Tax Act incurred on payments made to MSMEs by their buyers only when payment is actually made to MSMEs, returning 95 forfeited performance bank guarantee amount to MSMEs which were unable to execute contracts during Covid, etc.