Economic Survey: MSME reforms must continue to strengthen growth prospects of industry, economy

Ease of doing business for MSMEs: The Economic Survey 2022-23 tabled by Finance Minister Nirmala Sitharaman a day before the Union Budget 2023-24 has called for continuing the reforms undertaken by the government for the MSME sector. The survey highlighted that enhancing opportunities and productivity of the MSME sector have ‘large-scale implications’ for a resilient production ecosystem, thus strengthening the growth prospects of the industry and the economy as a whole. These reforms, therefore, must continue, it said.

Specifically, “reforms to reduce the compliance burden on MSMEs, enhance their access to finance and working capital and equip them with skills, knowledge and attitude to grow their businesses responsibly must continue. State governments should make conclusive progress on the various factor market reforms in different stages of completion,” the survey said as it underscored the steps taken by the government for MSMEs’ post-Covid recovery.

Also read: Economic Survey: MSMEs’ Covid recovery evident in GST paid crossing pre-pandemic level

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For instance, the Emergency Credit Line Guarantee Scheme (ECLGS), revision in the definition of MSMEs under the ambit of Aatmanirbhar Bharat, the introduction of TReDS to address the delayed payments for MSMEs, the inclusion of Retail and Wholesale trades as MSMEs, and the extension of non-tax benefits for three years in case of an upward change in the status of MSMEs, “have created a resilient support system for the MSME sector to grow.”

The MSMEs have also benefitted from access to digital platforms for their marketing needs and easy payments. With the Open Network for Digital Commerce (ONDC) creating opportunities for MSMEs to access e-commerce technology and diversify their target markets, this trend will likely strengthen further while onboarding GSTN as a financial information provider on the Account Aggregator platform will open up avenues for access to credit for MSMEs, the survey added.

Also read: Budget 2023: Fixing MSMEs’ delayed payments, credit, GST related issues must, say experts

Importantly, while the new age reforms undertaken over the last eight years form the foundation of a resilient, partnership-based governance ecosystem and restore the ability of the economy to grow healthily, the survey said that further reforms are needed to ensure that economic growth can both accelerate and be sustained at higher levels to deliver a better quality of life.

“The deregulation and simplification of compliances should continue to dismantle the licensing, inspection and compliance regime entirely,” the survey noted.

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