In spite of all initiatives announced by the government, things are not looking rosy as market conditions are dull and do not seem to be taking off.
By Manguirish Pai Raikar
Finance Minister Nirmala Sitharaman in her recent announcement promised to release the refunds from GST to MSME within 30 days. This has brought huge relief to this sector which is facing market problems for non-recovery of the payments. The facilitation council does try to help but it has limitations. This council needs to be given teeth by introducing strong punitive actions in the act. Most of the times it is the government and semi-government agencies which fail to honour the payments.
The Finance Ministry is aware that MSME plays a key role in generating employment and boosting exports. Government is now taking steps to help and promote this sector by taking steps to undo the wrong that has created problems for MSME in the post-demonetization period.
Fiscal incentives like interest rate subvention, lower tax rates for up to the certain turnover threshold for key MSME sectors, which help in achieving the twin objectives of exports and employment generation, along with schemes like PSB Loans in 59 minutes and Credit Guarantee Fund Trust For Micro And Small Enterprises (CGTMSE) have been introduced. In spite of all these initiatives, things are not looking rosy as market conditions are dull and do not seem to be taking off.
A proactive approach from the banks is not forthcoming. It is expected that there would be adequate fund flow from the NBFCs. Another good measure is regarding the transparency in MSME retail loans and factoring services to be introduced will definitely benefit and bring a smile on the face of the entrepreneur.
An important decision with respect to GST was taken such as in future all GST refunds shall be paid within 60 days from the date of application and all pending GST refund due to MSMEs will be paid within 30 days. The centre also announced that the ‘angel tax’ provision will be withdrawn for startups and their investors to lower its burden of compliance and boost sustainability. This announcement was to highlight the significant role of Indian startups in raising the country’s profile. “India has become the second-largest startup movement in the world. Last year we added about 1,200 startups,” according to data shared last month by Ravi Shankar Prasad, Minister of Electronics, Information and Technology and Law.
Other measures would be coming soon as the finance and MSME ministry is working overtime to revive and rehabilitate this sector. On behalf of the MSME industry, we request for strict implementation of government purchases through MSME along with prompt payment.
(Manguirish Pai Raikar is the Chairman – MSME at Assocham National Council. Views expressed are the author’s own.)