Policy Code
  • Home
  • News
  • Decode Policy
  • Analysis
  • Blog
Analysis

Budget 2019: A boon or a bane for MSMEs?

by Swapnil Chaudhary July 23, 2019
by Swapnil Chaudhary July 23, 2019

The Micro, small and Medium Enterprises (MSME) which play a crucial role in the development of the country’s economy have had some generous allocation of funds during the budget’s announcement on July 5th, 2019. Finance minister’s budget speech with slew of announcements and promises has garnered great hopes in the MSME sector which currently employs millions of people in the country.

The major takeaway from the budget for the MSME sector included allocation of around Rs 350 crore for 2 percent interest subvention for all GST registered MSMEs on fresh and incremental loans. It seemed like the government has acknowledged the sector’s major contribution in generating employments. This effort by the government can revive the growth prospective of the MSMEs and create more job opportunities. Additionally, the disbursal of loan through an online portal within 59 minutes will save ample time which thousands of the MSME units otherwise spend going pillar to post to save credit.

However, the 59 minute loan scheme had been announced by the government on November 2018 and as much as banking officials are apparently embracing and promoting the new funding avenues, the actual scenario is quite different when it comes to disbursing loans.

Sanjeev Layek, a representative of World Association for Small and Medium Enterprises said, “Through this scheme, the online portal gives MSMEs loan within 59 minutes, which indeed is very fast, but when these MSMEs approach banks for loans, they are asked for more documents and collaterals for disbursing loans.”

The loan availability may not be as easy as the government has made it seem in the proposed budget. But the banks’ stringency is also valid since providing collateral-free loans may jeopardize their funds thus increasing their Non Performing Assets(NPA). The government could have done something more to make the provision more robust but considering the stress the budget put into the MSME sector, it may have plans to empower the sector further.

Besides, the announcement in the budget to launch a common digital platform for MSMEs to upload their bills and process payments bodes well for the latter. This will eliminate delayed payments from the large companies thus resolving the liquidity crunch the MSME sector has been facing in recent times. It can finally bring small entrepreneurs into a formal financial system.

An extension of pension benefits to around 3 crore retail traders and shopkeepers with an annual turnover of less than Rs 1.5 crore is a commendable measure taken by the government. With the sector being comparatively unorganised, this scheme may gradually bring them online. Providing assurance to the small businesses on their financial security will give them long term life plans and will also contribute to their disposable income which keeps the economy of the country moving.

Many of our country’s small enterprises of women entrepreneurs have the potential to stretch to large scales but they have been constrained by the low credits. The announcement made in the budget speech 2019 on increment in the provision of Mudra loan of up to Rs 1 lakh to the women entrepreneurs will boost their growth which will further reflect in the country’s economy.

Considering the funds allocations and the new schemes and programmes the government has announced for the welfare of the MSMEs, it seemed to have recognised the critical role of the sector in taking the nation to $5 trillion economy. Millions of MSME units present in India today will hopefully benefit the proposed Union Budget upon implementation and we shall have all-encompassing growth in the country.

0 comment
0
FacebookTwitterPinterestEmail
Swapnil Chaudhary

previous post
Key takeaways from Budget 2019 for the banking and finance sector
next post
50th anniversary of banks nationalisation in India

You may also like

Two birds with one stone: Revised CSR policy...

January 7, 2022

Defence Production Policy To See Daylight Soon, Second...

May 28, 2021

Govt drafts new policy to regulate media companies...

March 4, 2021

To accept or to not accept: Whatsapp’s new...

February 26, 2021

New mapping policy to be promising and growth...

February 17, 2021

Vehicle Scrappage Policy to generate employment and attract...

February 11, 2021

Policy reforms in telecom: Careful ministrations or half-baked...

July 7, 2020

Why does India need to review its cyber...

June 24, 2020

Towards Atmanirbhar Bharat and overcoming COVID-19: Indigenous ACSG...

June 19, 2020

How employee policies can change in the post-Covid...

June 15, 2020

Leave a Comment Cancel Reply

Save my name, email, and website in this browser for the next time I comment.

Recent Posts

  • Decoding crypto dynamics for a conscious and cautious investment

    April 8, 2022
  • Adani Group to start a cement factory in Godda

    June 30, 2021
  • From Covid-19 to cyclone and more: Adani Group, Essar, and Vedanta making their way through every challenge

    June 9, 2021
  • Prime Minister Modi Calls For Policies Where Farmers Can Contribute To India’s Energy Sector

    June 6, 2021
  • Adani Group Chhattisgarh completes acquisition of GMR Energy

    May 28, 2021

Newsletter

Subscribe my Newsletter for new blog posts, tips & new photos. Let's stay updated!

Decode Policy

  • Behind the scenes: McDonald’s franchise location policy

    July 16, 2021
  • Bengaluru gets new parking policy; vehicle owners now need permit to park cars

    February 23, 2021
  • A new draft plan for avifauna: Addressing the impact of anthropogenic activites

    February 10, 2020
  • U-Haul’s anti-nicotine policy: Intelligent or crazy contrivance

    January 17, 2020
  • Throwing some light on the new liberalized norm for fuel retailing

    December 6, 2019
  • Government to launch “One nation, One Ration Card” scheme by June 2020

    November 7, 2019

Policy Code

Policy Code

Policy code is a go-to source for business news, opinions and expert comments on the shift of country’s economy and industry specific blogs.

About

  • About Us
  • Disclaimer
  • Privacy policy
  • Terms of Service
  • Contact Us

News

  • Decoding crypto dynamics for a conscious and cautious investment

    April 8, 2022
  • Every drop matters – Coal mining companies step forward for mine water utilization

    March 17, 2022
  • Allahabad High Court to come up with Do’s and Don’ts for lawyer

    July 6, 2021
  • Facebook
  • Twitter
  • About Us
  • Disclaimer
  • Privacy policy
  • Terms of Service
  • Contact Us

© 2021 Policy Code. All Rights Reserved.

Policy Code
  • Home
  • News
  • Decode Policy
  • Analysis
  • Blog