India Budget 2024: MSMEs Seek Support For Growth And Digital Integration In The Upcoming Budget

With the interim budget a week away, experts are optimistic about anticipated reforms, centering around robust MSME support and advancement in DPI
MSMEs Seek Support For Growth
MSMEs Seek Support For Growth

India's standing in emerging markets has risen significantly, securing the second position in the MSCI Emerging Markets index, surpassing Taiwan and trailing only China. The National Statistics Office (NSO) projects India's real GDP growth for 2023-24 at an impressive 7.3 per cent.

MSMEs account for more than a quarter of India's GDP, though still below pre-pandemic levels. Despite this, their contributions to overall employment and innovation remain significant.

Udyam registrations surged to 2.19 crore by December 2023, with 88.89 lakh registrations from January to December 2023, up from 1.31 crore in December 2022. In the last budget, the government allocated around Rs 22,140 crore for the MSME segment, along with a Rs 9,000 crore infusion into the Credit Guarantee Fund and a Rs 10,000 crore fund for technology and infrastructure development in MSMEs.

In the upcoming interim budget, analysts are anticipating positive reforms within the industry.

Sushil Kumar Jain, Convenor(Delhi-NCR), Confederation of All India Traders, said, "To promote adoption of e-commerce among MSMEs steps such as simplifying the regulatory framework, providing tax benefits, and creating infrastructure for logistics and digital payments would be beneficial. This would help MSMEs to increase their customer base and reduce operational costs."

As per a report by TransUnion CIBIL released last year, for the previous fiscal year (Q4, FY23), there was a 33 per cent increase in demand for loans from MSMEs in the January-March period compared to the corresponding period the previous year. However, credit supply only rose by 11 per cent in the same quarter, indicating a potential credit crunch.

"The upcoming Union Budget should focus on measures that would improve access to liquidity, skill development, and ease of doing business for small businesses. The government could also focus on encouraging the use of DPI (Digital Public Infrastructure) that will help improve access to credit for MSMEs," said Arun Nayyar, MD and CEO, NeoGrowth.

Moreover, since industries have yet to witness the digitization surge, experts express confidence that the government will continue investing in DPI. "We expect ONDC to play an integral role in shaping the MSME ecosystem by helping MSME suppliers to reach a larger customer pool and leverage diverse logistics to accelerate growth," Jain said.

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