MSMEs seek financing relief ahead of Budget

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With less than ten days left for the Union Budget, the Micro, Small and Medium Enterprise (MSME) sector awaits a much-needed tax relief as well as relaxation of financing norms.

The Union Budget, which comes at a crucial stage in the political arena, not only is the last full-fledged budget of the Narendra Modi-led government, but is also the first one to be presented post the introduction of the Goods and Services Tax (GST) in July, 2017.

Post the incorporation of this taxation scheme, protests have been staged in various pockets of the country by textile vendors, retailers and so on. A common suggestion prior to every meeting of the GST council meeting has been reduction of tax slabs in order to provide relief to small vendors.

Here are some key expectations of the MSME sector, as per Sampad Swain, CEO and co-founder of Instamojo, an online payment gateway provider:

Cheaper Loans:

As the MSME segment is considered to be one of the biggest sectors for job creation, the government is planning to introduce a bunch of loan and financing schemes to help micro and small businesses start up and grow their business. To put that into context, about 1.75 trillion loans were given out by the Pradhan Mantri Mudra Yojana in 2017.

The small business lending market reportedly grew 13 percent in the last five years and is expected to accelerate in the next five. Therefore, expect more loans to come into the market, reduced interest rates, and easier financing options.

Improve Ease of Doing Business:

The government is looking to help small businesses grow by improving the overall business climate. Experts suggest there will be a special focus on improving infrastructure and subsidies for the agriculture and manufacturing sectors.

Businesses in both sectors should see some sort of subsidies coming their way. Also, with GST still being a tricky area, the union budget will highly depend on the new rates.

Make in India to be on the forefront:

The government will continue to take keen interest and promote the Make in India, Skill in India, and Digital India initiatives. It plans on getting another 100 million Indians on the internet this year, under a plan called 'BharatNet.'

On a related note, the Budget will be presented on February 1.

While the focus is likely to be on agriculture, education and healthcare, it is said the Union Budget 2018-19 will not be a populist budget, contrary to is expected.

Infrastructure is also expected to get a much-needed impetus in the allocation.