The government’s intent of promoting ‘ease of doing business’ among MSME players was evident in the announcements made by FM Arun Jaitley for MSMEs. With major focus on improving lending in the MSME sector, the government has announced a number of measures to ease the lending process and has also addressed to improve loan accessibility for MSMEs.
The allocation of Rs 3 lakh crore for lending under Mudra will definitely boost the sector financially and help the MSME’s grow their businesses more efficiently. Further, reduction of the corporate tax to 25% for small companies with annual turnover of up to Rs. 250 crore is a master stroke and this will bring relief to about 90% of MSME players in India. The government has also proposed revamping the system of sanctioning of loans to SMEs by linking it with GSTN. This will immensely help MSMEs with better management of working capital and faster discounting of the bills. Bank recapitalization will enable the public sector banks to lend an additional credit of 5 lakh crore, thereby allowing more companies and MSMEs to access required business loans. The FM’s agenda to provide viable environment for FinTech companies to grow will further help bridge MSME lending gap.
However, we had hoped for some more transformational reforms to boost the overall morale of MSME players. Some of the measures we expected the government to focus on are: