Union Budget 2019: MSMEs get a leg-up, says Crisil COO Amish Mehta

As in previous years, the Budget made a number of policy announcements to spur the micro, small and medium enterprises (MSMEs) segment. While the near-term impact may be moderate, given the limited allocation to the sector due to resource constraints, the steps taken in the Budget are in the right direction.

A 2 per cent interest rate subvention on fresh loans for GST-registered MSMEs would benefit a fifth of the companies 

in this segment. 

Amish Mehta, COO, Crisil

But the Rs 350 crore allocation for this would support only around 10 per cent of incremental MSME lending. The move to allow NBFC participation on trade receivable discounting system is welcome, given the chronic working capital funding issue MSMEs face. This opens a new lending avenue for NBFCs, which accounted for about 13 per cent of MSME lending last fiscal. Many new measures to help the start-up ecosystem, including removal of the angel tax, is a big positive. 

Creation of a new payments platform by the Centre to facilitate faster payments for MSME vendors will also ease working capital and cash flow stress.