Ease of doing business for MSMEs: The pre-budget meetings with finance minister Nirmala Sitharaman, concluding on Monday, received multiple suggestions from representatives of various sectors including mechanism for green certification to help MSMEs, rationalisation of income tax, creation of innovation clusters, schemes for improving domestic supply chains, Social Sector Entrepreneurship Fund for Social Impact and more.
According to a statement by the finance ministry, urban employment guarantee programme to boost employment generation in urban areas, reduction of taxes on electric vehicle, introduction of EV policy, and measures to promote India as a hub for green hydrogen, were other suggestions from various sectors.
During the virtual meetings from November 21 to November 28, 2022, the government also received suggestions around training and accreditation of care economy workers, portable social benefit for children, national regulatory authority for water and sanitation, coverage of unorganised workers under ESIC, continuation of public capital expenditure, fiscal consolidation and lower customs duties, etc., from various sectors.
Prominent associations catering to MSMEs and MSME lenders such as FISME, FIDC, Laghu Udyog Bharati had shared their budget recommendations with Sitharaman during virtual meetings. Among the prominent suggestions were scrapping the bank loan rating (BLR) requirement by banks to lend to MSMEs and instead developing a unique rating model focusing on solvency alone of the borrower, reserving manufacturing and marketing of traditional, conventional and low-technology products such as bread, bun, stationary items, etc. of mass consumption for MSMEs, treat retail loans to small businesses/individuals differently in comparison to large corporate loans, etc.
Post-Covid, the government had introduced multiple initiatives such as revising the MSME definition, ECLGS scheme, subordinate debt scheme, etc., to help the sector recover. The government has also significantly increased the budgetary allocation to the MSME ministry post Covid. From Rs 7,011 crore allocated in FY20, the allocation was enhanced to Rs 7,572 crore in FY21 before more than doubling to Rs 15,700 crore in FY22 and Rs 21,422 crore in the current fiscal.