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A growth oriented, inclusive Budget: FISME

Given the constraints of global upheaval and lingering post Covid supply chain disruptions, Finance Minister Nirmala Sitharaman has struck a finance balance between the need of enhanced capital expenditure and fiscal discipline to push for sustained economic growth.

Federation of Indian Micro and Small & Medium Enterprises (FISME) finds it a growth oriented and inclusive Budget.

FISME welcomes the key announcements for MSME sector which will ensure its growth and reduce pain.

Firstly, infusion of Rs. 9000 crore to Credit Guarantee Fund will be leveraged to facilitate flow of collateral free funds to the tune of Rs. 2 lac crore to MSMEs. With the back of the Guarantee, the cost of funds also may come down by 1%.

Secondly, to support MSMEs in timely receipt of payments, it has been proposed that deduction for expenditure incurred on payments made to MSMEs will be allowed to their buyers only when payment is actually made. Which means, buyers cannot claim deduction without first paying to MSMEs. It will force them pay in time.

Thirdly, the Budget proposes to bring relief to large number of Government MSME suppliers who were inflicted penalties or their Banka Guarantees were forfeited as the word was adversely affected during Covid. Now, 95% of forfeited amount is proposed to be reimbursed.

To the government suppliers another proposition could also spell relief. Budget announces that ‘to settle contractual disputes of government and government undertakings, wherein arbitral award is under challenge in a court, a voluntary settlement scheme with standardized terms will be introduced’. Graded settlement terms are being worked out depending on pendency level of the dispute.

Fourthly, up to a turnover of Rs. 3 crore, small businesses need not go for statutory audit. The caveat is that their cash receipts are not more 5%. Earlier the limit was Rs. 2 crore. A similar relied is proposed to professionals and their limit is increased from Rs. 50 lac to Rs. 75 lac.

Besides these measures, the there are several forward looking initiatives announced in Budget:

  • Setting up of a National Financial Information Registry which would help generate robust information system and help MSMEs access loans.
  • Common Universal Identifier for businesses proposed in the budget will also rid MSMEs of the need for having multiple identities.
  • A new initiative of PM VIshwakarma KAushal Samman (PM VIKAS) will help artisans integrate the MSME value chain.

The Capex outlay has been increased 33% to 10 lakh crore and makes up 3.3 per cent of GDP. It will provide the impetus for demand and economic growth.

It is creditworthy that Finance Minister has been able to make everybody happy without being populist.

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