Union Budget 2020: What are MSMEs Expecting

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Are you ready for the Union Budget 2020 set to be announced on February 1, 2020? There’s a lot of chat on the budget expectations for MSMEs this year. As the economy slumps to a 6-year low, what are some measures that can help boost growth in the country?

Listed below are the top 4 union budget 2020 expectations for MSMEs:

1. A distressed asset fund for MSMEs

Small businesses affected by natural calamities such as drought, floods, and earthquakes expect the government to allocate funds to assist their businesses.

The Government is reportedly planning to announce a distressed asset fund of Rs 5,000 crore for any small business facing a liquidity crunch.  Experts suggest enabling liquidity can call for a 6.5% GDP growth!

In what is being called a ‘fund of funds’, the government could allocate Rs 10,000 crore for private equity firms and corporations interested in investing in the MSME sector in the budget 2020.

2. Medium enterprises want out

MSME stands for Micro, Small and Medium enterprises. Well, it seems as though a majority of the ‘ medium’ enterprises, want to be excluded from the administrative control of the Ministry of MSME in 2020 budget.

Why? 

Over the 6 Crore MSMEs present in India, only 5000 are Medium size enterprises. A spokesperson for the Ministry of MSMEs stated that medium enterprises have specific needs and require policy attention and would be better if administrative control is shifted from the Ministry of MSMEs to the Ministry of Commerce and Industries.

The micro, small and medium enterprises (MSME) ministry has sought a budget of 12,000 CR for budget 2020 – a 71% increase in funds compared to last year.

3. Introduction of Payment Act

The Financial Express reports that a Payment Act could be a highlight in the upcoming Union Budget.

The act is to ensure timely payments by the government and other large companies to MSMEs.

Currently, MSME Samadhaan (a delayed payment monitoring system) is in place for MSMEs to file cases with respect to delayed payments. According to the article, out of 32,385 applications filed by MSMEs, 2,031 applications got disposed of.

4. Enabling growth for micro-entrepreneurs:

Can the government introduce policies/allocate funds for the growth of micro-enterprises that are unable to graduate into small size businesses?

Lack of access to capital, infrastructure, skilled labor, and power supply issues that are some problems that plague a micro-enterprise in India.

“Small businesses face the challenge to remain small due to a lack of funds as they grow but cannot produce matching collateral securities in the ratios of increased funds needed. “ FISME (Federation of Indian Micro and Small & Medium Enterprises)

Other expectations from the MSME budget 2020:

  1. MSMEs in Jammu and Kashmir expect the Union Budget 2020 to allocate setting up Public  Sector Undertakings (PSUs).
  2. Increased employment opportunities for the MSME sector. Unemployment is at an all-time high, with fewer women employed in core areas of the sector.
  3. Easier GST compliance norms and reduced fines for late filing.
  4. An increase in Government partnerships for struggling public sector startups.
A ‘sweet’ truth:

Did you know? The Union Budget 2020 process kicked off today post a ‘Halwa’ ceremony. Literally! This ritual involves the preparation of the sweet dish, distributed to the entire finance ministry staff. Here’s hoping the budget 2020 will provide sweet tidings to the MSME sector too.

In short, MSMEs want better access to credit and serious action on the MSME schemes from the last financial year. Small businesses want the Government to focus on reforms, cost-control, tax-efficiency, non-GST sources of revenue & sell unprofitable Public sector undertakings.

What does your business want from the Government? Let us know in the comments. Follow our twitter handle for the latest Union Budget 2020 updates.


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