Union Budget 2021 MSME Expectations
Jan 05, 2021
The manufacturing and service sectors of Micro, Small, and Medium Enterprises work within a limited financial frame under the Micro, Small, and Medium Enterprises Development Act, 2006. The Government of India promotes MSME with several benefits, such as easy bank loans grant, income tax exemptions, subsidies, and miscellaneous concessions. With the focus on the ‘Make in India’ campaign and the contribution of MSME to the Indian economy, the Government of India is giving sufficient leverage to visualize a flourishing MSME. The Union Budget 2021 is expected to continue supporting MSME. The question- is whether the Union Budget 2021 will prove to be a silver lining to retarded economic growth or not. Let us examine the reasons that justify Union Budget 2021 to meet MSME expectations.
Crippled Economy of Fiscal Year 2020 -21
The pandemic caused economic chaos worldwide. The repercussions are predicted to linger on, which may take years to stabilize. The impact has pushed MSME into a state of vulnerability. Gauging the ripple effects of the pandemic, the Union Budget 2021 needs to address the MSME setback. It should provide sound financial aid, which accelerates its developmental aspects. Approximately 63 million registered MSMEs employed 110 million people in the year 2019-20. The crippled economy is likely to increase unemployment and push them below the poverty line. The government should chalk out the Union Budget 2021 to ensure a robust MSME that employs the masses. The incentive schemes, rebates, and tax exemptions are some policies that can be curated to step-up the growth of the MSME sector.
Reforms in the Union Budget 2021 Needed to Meet MSME Expectation
Considering MSME as a pivotal sector that acts as the backbone of the Indian economy, the Union Budget 2021 should emphasize MSME expectations. MSME has suffered an enormous setback due to slow-paced development. The government needs to take drastic measures to revive the MSME by reforming the Union Budget 2021, such that it facilitates MSMEs growth. It should introduce new schemes to encourage people to invest in MSME. The government can achieve this by widening the eligibility criteria and promoting Startups to increase production. Simplified registration schemes for MSME can be more welcoming for participants.
Thinking Out of the Box
Digitalization, re-engineering process, and improving the multimodal transportation system can promote the seamless transfer of goods across the country. The National Logistics Policy gives thrust to MSME and enables competitiveness. The implementation of the policy can develop the core sectors of India, such as fertilizer, coal, and steel. Furthermore, launching digital platforms can tremendously help MSME in establishing buyer and supplier relationships. An online marketplace can create an enhanced online marketplace and keep the cash flowing.
Predicting The Trend
Considering the previous years’ trend, FM Nirmala Sitharaman seems to be favoring the MSME. Estimating the Indian economy to shrink in the current fiscal year by 3.2%, it is crucial to float the Union Budget 2021 that can help MSME to bounce back up. Apart from providing financial relief and aid, MSME can restore its economic prospects by escalating its production and export. The Union Budget can subsidize export taxes for MSME to enable them to work with global customers and investors seamlessly. Easing RBI rules and Foreign Exchange Management Act (FEMA) can stimulate the inflow and outflow of funds.