Union Budget: What’s Ahead for SMEs
In the backdrop of the past two years (2020-2022), the SME sector has seen a lot of ups and downs. The distress caused by the pandemic and the lockdown caused by it will remain for the years to come. The rising cost to start enterprises and of the raw materials will take time to balance out.
All of the SMEs faced a crisis of low demands and costly supplies. Small and medium enterprises do not have heavy capital that can last them for long while taking losses. It is an imperative for them to generate some revenue that would cover the basic input costs. Due to the lockdown, even the basic revenue couldn’t be generated which led to a diminishing of many great initiatives in the SME sector.
With the coming of Budget 2022, the SME sector had high hopes from the Finance Minister to provide some relief to these enterprises and give a boost to the sector as the sector is a large contributor to the country’s GDP.
SMEs had very basic expectations, ranging from an increase in the inflow of capital to a simplified taxation system that would take the burden of extra expenditures. Along with certain things in the new Budget that don’t suit these expectations there are numerous things aim at providing some respite to the sector. Here are some of these policies that can rejuvenate the SME sector:
- ECLGS Scheme: Introduction of Emergency Credit Line Guarantee Scheme (ECLGS) till March 2023. This will fulfill the expectations of an increase in the inflow of capital by the SME sector. Another part of this scheme is that the government has announced that it will top up the guarantee cover by 5,00,000 crores.
- RAMP Initiative: Raising and Accelerating MSME Performance (RAMP) is a new initiative introduced in Budget 2022. The government has a plan to extend support of Rs. 6000 crore to rate MSME over the course of the next five years. It will provide the much needed help to the diminishing sector.
Also Read:- Unsecured Business Loans: Best Source of Capital for SMEs - PLI Scheme: Production Linked Incentive (PLI) scheme is being largely applauded by the SME sector. As the name suggests the scheme plans to provide incentives to the company that has large potential that can be measured by their levels of production. It would channel the benefits in the right direction and incentivize the well-doing enterprises to put more effort.
- Collaborating with MSME online portals: All the SME portals such as : Udyan, E-Shram, NCS, and ASEEM will be interlinked with each other to provide better services to SMEs. This centralized infrastructure will make it easier for SMEs to obtain credit and create more entrepreneurial opportunities.
These some initiatives that were highlighted in the union budget 2022 will create a favorable environment for SMEs to work in. This will help bring the Indian economy back on track by improving the levels of the backbone of the economy that is the MSME sector.