CHENNAI: Recognising micro, small and medium enterprises (MSMEs) as a key engine of India’s economic growth, Union Finance Minister Nirmala Sitharaman, in her ninth consecutive Budget, proposed a slew of measures to help the sector scale up businesses.
However, MSMEs wanted a special package from the government to improve employment opportunities, which would help address the shortage of skilled labour in the sector.
The major announcement is on the liquidity front, as the MSMEs continue to face active cash flow.
The government has proposed to make Rs 7 lakh crore available for MSMEs through the Trade Receivables Discounting System (TReDS).
Proposing four measures under TReDS, the government mandated TReDS as the transaction settlement platform for all purchases from MSMEs by public sector enterprises, while requesting corporates to follow suit.
It also proposed a credit support mechanism through the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) for invoice discounting on the TReDS platform. It further proposed linking the Government e-Marketplace with TReDS to share information with financiers on government purchases from MSMEs, and introducing TReDS receivables as asset-backed securities.
Raj Ramachandran, Partner, JSA Advocates & Solicitors, said, “Allowing CPSEs to deal with MSMEs through TReDs will help the latter with continuous cash flows. Their main concern was liquidity, as the payment from public sector enterprises would take several days to materialise. Now they will have visibility of the business.”
The Finance Minister has also proposed to introduce the Rs 10000-crore SME Growth Fund to create future ‘Champions’ in the MSME sector, incentivising small businesses and enterprises and first-time businesspersons.
She has proposed to top the Self-Reliant Funds, introduced in 2021, with Rs 2,000 crore to support MSMEs to access capital.
However, the MSME industry is not happy with the announcement of funds for the sector, as it wanted to sustain focus on generating employment, as there are over six million MSMEs in India.
Balachandran, who runs an MSME in Chennai’s Ambattur, said, “The government should have announced a job scheme similar to MGNREGA. Under the MGNREGA, a worker gets Rs 250 per day. An MSME can give anywhere between Rs 300 and Rs 500. This would generate huge employment for youth coming from rural parts of India.”
The government has announced Rs 1200 crore under Fund of Funds, Rs 9,000 crore under the Guarantee Emergency Credit Line, Rs 1500 crore under Raising & Accelerating MSME Performance and Rs 3860 crore under PM Vishwakarma. The PM Vishwakarma scheme helps artisans and others with funds.