Budget 2024 expectations: Considered as the backbone of the Indian economy, the Micro, Small, and Medium Enterprise (MSME) sector consists of 29.15% of India’s Gross Domestic Product (GDP) till 2021-22.
For the sector to unleash its fullest potential and increase its contribution to the Indian economy greater availability of institutional credit is the need of the hour. In the upcoming interim budget Industry experts are hoping for incentivised lending rates, credit guarantee schemes, and increased funding channels to enhance financial resilience for the MSME sector.
“We anticipate a budget that prioritises financial inclusion and ease of doing business, fostering a conducive environment for growth. Measures such as simplified regulatory procedures and reduced compliance burdens can empower startups and MSMEs, promoting a more agile and competitive landscape,” said Rohit Arora, CEO and Co-founder, of Biz2X and Biz2Credit.
Signifying affordable credit as the cornerstone for MSME, he advocated for the need for incentivisation of lending rates, credit guarantee schemes, and increased funding channels to enhance financial resilience.
“In alignment with the digital era, investments in digital infrastructure, cybersecurity, and skill development are essential for the sustainable growth of startups and MSMEs. A comprehensive budget addressing these expectations will not only fortify their financial foundations but also propel these sectors to play a more significant role in driving economic recovery and job creation,” he added.
"Lack of competition in the banking sector (75 percent of banks being public sector) and weak regulatory institutions, which have not been very successful in ensuring customer centredness of banks, and near-defunct grievance redressal mechanism (Office of Banking Ombudsman) all coalesce into an unhappy experience for an ordinary MSME owner with the banks -- whether private or public," said FISME Secretary General Anil Bhardwaj.
MSMEs in sectors like automotive, electronics, industrial, and electrical machinery, and chemicals, require the reduction of risks in capital flows, according to consultancy firm Deloitte.
"This sector has the talent and risk-taking appetite and can play a big role in strengthening India's capabilities even in critical sectors such as semiconductors, space technology, defence, and medical equipment," Puneet Kaura, Chairman of CII Delhi State and MD & CEO of Samtel Avionics, told PTI, pointing out towards the lack of timely credit to MSMEs at competitive costs.
“From the perspective of the IT and Tech industry, the forthcoming Union budget is the right platform to consider expediting Government expenditures directed towards the creation and improvement of digital public goods, with a particular emphasis on domains like healthcare, education, agriculture, and MSMEs,” said Devroop Dhar, Co-Founder & Managing Director, Primus Partners.