Budget Expectations: MSME Sector Expects More Empowerment

The SME sector is the backbone of Indian economy. In the upcoming budget, we expect the Government to make announcements that will empower small businesses thereby reviving the economy from the impact of the pandemic. In November 2021, the government announced the Special Credit Linked Capital Subsidy Scheme for the MSMEs (Micro Small and Medium Enterprises) in the services sector. This should be extended to SMEs whose turnover is less than Rs. 5 crore as well as it will help them procure service equipment through institutional credit for advancement of their technology.

The Government should also look at tax breaks for companies providing technology support to MSMEs. At a time when we are expecting the third wave of Covid to hit economic activity and businesses are facing difficult times, the Government must take measures to meet the SME lending requirements. Subsidizing the cost of funds to NBFCs that focus on lending to small merchants for loans below Rs. 20 lakhs is way to ensure easy access to credit.

Besides, we expect the Finance Minister to increase credit guarantee for lending while also providing relief in terms of tax sops or subsidizing manpower cost for digital players to promote digital payments in tier 3 to 6 towns. Lastly, this Budget should further look at propelling the country towards a digital future. While multiple initiatives have been undertaken to promote digital payments, the Government must look at given some form of incentive to small businesses to encourage the adoption of digital payments and further strengthen the payment infrastructure of the country, especially in smaller towns.

About the author

Ketan Patel is the CEO of Mswipe. Its key investors include B Capital, UC-RNT, Falcon Edge Capital, Matrix Capital Partners, DSG Partners and Epiq Capital. The opinions mentioned above are that of the author and do not reflect the opinion of Greynium Information Technologies Pvt Ltd.