Budget 2023: MSME Sector Major Expectations from Finance Ministry

Nirmala Sitharaman, the finance minister, will deliver the Union Budget 2023 after 5 days. Every industry has specific requirements for the budget. The government has launched a number of programs to support the expansion of MSMEs, such as the Make in India project, which aims to increase domestic production while reducing dependency on imports and improve India’s rankings on the ease of doing business index. In the 2018 Union Budget, the government might make adjustments to the sector’s export and import duty structures in an effort to increase the competitiveness of Indian MSMEs on the global market.

Here are some industry expectations for the forthcoming Budget as the MSME sector emerges from the pandemic’s recession.

The primary expectation of the MSME Budget of 2023-24 is to get enhanced access to working capital. The Indian government is already looking forward to the initiatives like restructuring the Credit Guarantee Scheme and full-fledged integration of Udyam, e-Shram, and National Career Service and ASEEM portals. It has also extended the non-tax benefits for MSMEs for up to 3 years. Alongside this, education in leveraging marketing and technology is pivotal for the growth of MSMEs and indispensable to making India self-reliant. The MSMEs are not only the highest job creators but also the highest taxpayers in the country. However, these small companies, which operate with the sentiment of survival, often face hardships when their working capital becomes stifled due to delayed payments and obstacles in the supply chain.”

Accelerating the credit flow is also important in order to achieve India’s $5 trillion economy dream by 2025 as the MSME sector has been a significant driver in the country’s rise as the world’s fifth largest economy, suggests KPMG November 2022 report on non-banking financial companies (NBFCs) and housing finance companies (HFCs). The research also observed that despite the MSME sector suffering significant financial losses as a result of the Covid epidemic, it has been doing well thanks to the government’s sound policy actions. According to the paper, 88% of registered borrowers come from the micro-segment, 10% from the small segment, and only 2% from the medium sector, driving the MSME loan market up from Rs 31 lakh crore in March 2020 to Rs 36.4 lakh crore as of June 2022.

The MSME sector’s ability to conduct business should be improved, and that should be a top priority for the budget for 2023. Additionally, it is urgently necessary to put policies into place that reduce input costs, boost liquidity, and encourage financial inclusion by providing accessible financial products to small businesses. Implementing support strategies like startup-friendly programs that enable increased investment in innovation and tax advantages should be done in order to further support small businesses and empower business owners.