With this year’s Union Budget just a few days ahead, I believe it’s a good time to discuss what the MSME sector expects from the Finance Minister. I think a lot has been discussed in our earlier editorials about what plagues the sector, but today I would like to focus on how the Finance Minister in her upcoming Budget can help this important sector in mitigating at least some of these hurdles.
Like everyone in the MSME sector, I am hopeful that favourable measures in the Budget will alleviate the challenges of MSMEs to a great extent.
The Budget should invariably have provisions wherein the government can expand and strengthen existing schemes, like the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) and the Pradhan Mantri MUDRA Yojana. By doing so, it can significantly broaden their reach, allowing more businesses, particularly in rural areas, to access collateral-free credit. Also an increase in allocations for other schemes such as CGTMSE and Mudra Yojana will also go a long way in helping our small businesses.
I would like to draw your attention to a recent report which has revealed that our country’s MSMEs today face a credit gap of $530 billion, and that only 14 percent of the 63 million small businesses actually have access to credit – not a very rosy picture I would say. And sadly this $530 billion financing gap attributes primarily to systemic challenges within the country’s banking and financial system
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