Video: FY23 budget to bring cultural change in MSMEs’ payment issue, says expert

Credit and finance for MSMEs: How budget announcements will positively impact micro and small businesses this year and ahead with better compliance as well as a lower regulatory hassle to achieve higher growth, explains Rajiv Chawla, Founder and Chairman of MSME body IamSMEofIndia.

Written by MSME Desk

April 6, 2023 19:07 IST

budget 2023, nirmala sitharaman, delayed payments, msme credit, cgtmse, rural artisans, iamsmeofindia, msme association, rajiv chawla

Credit and finance for MSMEs: There were predominantly four major steps announced in the budget this year to support MSMEs while other measures were also intended to benefit MSMEs along with other businesses. Revamping the CGTMSE scheme, enabling more micro units for presumptive taxation, addressing delayed payment issue, supporting MSMEs which defaulted in implementing contracts during Covid, supporting artisans with a new scheme, and more were some of the measures announced by finance minister Nirmala Sitharaman for small businesses.

Also read: PM Modi on CGTMSE scheme: India betting on youth’s entrepreneurial zeal to propel economy

The biggest reform arguably to support MSMEs in the timely receipt of payments was the proposal to deduct for expenditure incurred on payments made to them by buyers only when payment is actually made to MSMEs. This meant that buyers cannot claim a deduction without first paying MSMEs.

Also read: PM Modi on CGTMSE scheme: India betting on youth’s entrepreneurial zeal to propel economy

The other big reform was the revamped CGTMSE scheme, which has come into effect on April 1, with an infusion of Rs 8,000 crore and the reduction in annual guarantee fee for banks for loans upto Rs 1 crore from a peak rate of 2 per cent per annum to as low as 0.37 per cent per annum in order to reduce the overall cost of credit to the micro and small enterprises.

How these initiatives will positively impact micro and small businesses this year and ahead with better compliance as well as a lower regulatory hassle to achieve higher growth, explains Rajiv Chawla, Founder and Chairman of MSME body IamSMEofIndia.