Sarabjit Kaur
Unveiling the last full-year budget before election in Parliament, finance minister Arun Jaitley on Thursday announced a slew of initiatives for micro, small and medium enterprises (MSMEs). These measures include making easy access to finances to MSMEs on the back of mass formalisation within the sector post-demonetisation and tax rebates.
The minister said that formalisation exercise led to generation of an enormous amount of financial information, which his ministry is using to make better policies for the sector. The big data thus generated is being used for improving the financing of MSMEs and meeting the working capital needs, he said.
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The minister has proposed to extend the benefit of reduced corporate tax rate of 25 per cent, which he announced in the last budget, to companies which have reported a turnover of up to Rs 250 crore in 2016-17. The earlier threshold as Rs 50 crore. This move will benefit 99 per cent of MSMEs which file returns, according to Jaitley.
Jaitley specifically addressed the issue of financing MSMEs in the budget speech, given that the sector was plagued by the dual impact of demonetisation and less-than-perfect implementation of the goods and services tax. The finance minister said, “It is proposed to onboard public sector banks and corporates on Trade Electronic Receivable Discounting System (TReDS) platform and link this with GSTN. Online loan sanctioning facility for MSMEs will be revamped for prompt decision making by the banks.”
He also allocated Rs 3,794 crore to the MSME sector for credit support and capital interest subsidy.
He added that the government would soon announce measures to effectively tackle the non-performing assets and stressed accounts of MSMEs, a move which will considerably ease the cash flow challenges faced by them. “This will enable a larger financing of MSMEs and also considerably ease the cash flow challenges faced by them,” said the finance minister.
Pointing out that MSMEs can become a very powerful vehicle for receiving loans under MUDRA scheme, Jaitley said, “Refinancing policy and eligibility criteria set up by the MUDRA will be reviewed for better refinancing of the MSMEs.” Lauding the success of MUDRA scheme, he said, “It is proposed to set up a target of Rs 3 lakh crore for lending under MUDRA in 2018-19, having successfully exceeded the target in all previous years,.
He said that the MUDRA Yojana, launched in April 2015, has led to a sanction of Rs 4.6 lakh crore in credit from some 10.38 lakh MUDRA loans. The 76 per cent of the loan accounts are of women and more than 50 per cent belong to scheduled caste, scheduled tribe and other backward class, he added.
He also highlighted that non-banking financial companies stepped up financing to MSMEs after demonetisation.
Asserting that use of fintech in financing space will help growth of MSMEs, Jaitley said that a group in the Ministry of Finance is considering a policy and institutional development measures needed for creating the right environment for the fintech space to grow in India.
(With PTI Inputs)
