Budget Expectations: It is important for the government to focus on the MSME sector, especially rural MSMEs, to make it easier for them to set up business.
Everyone is eagerly waiting for the Union Budget 2024 to be presented on February 1. Keeping in view the changing needs of the economy, the budget will have a strategic focus on micro, small and medium industries (MSME). According to the enterprise registration portal, the MSME sector, the second largest employment generating sector after agriculture, has recorded an impressive figure of employing 12,36,15,681 persons between July 1, 2020 and August 1, 2023.
Recognizing its important role, the Ministry of Micro, Small and Medium Enterprises has implemented various schemes. Issues like credit assistance, new enterprise development, formalization, technical assistance, development of infrastructure, skill development and market assistance are covered under these schemes. The Udyam Assist platform, launched on January 11, 2023, is also a notable step towards bringing informal micro enterprises into the formal realm. In this way they can become able to avail benefits under Priority Sector Loan. Such measures play an important role in making these enterprises financially viable.
MSMEs well positioned to take advantage of opportunities: The Central Government's commitment to transform Karnataka into an electric vehicles hub aligns seamlessly with emerging global trends. By supporting 1000 startups, setting up charging stations and electrifying Bengaluru City Transport buses, the government aims to drive adoption of sustainable measures, providing immense opportunities for MSMEs in the clean energy sector.
India has also established itself as a country where investing can be the first choice of people. MSMEs are well placed to take advantage of the opportunities arising from 'China + 1' sentiments. This strategic business approach, diversifying into investment and manufacturing in promising developing economies, aligns seamlessly with the growth trajectory of Indian MSMEs.
It is necessary to focus on rural MSMEs
Given these developmental efforts, it is important for the government to focus on the MSME sector, especially rural MSMEs, to assist them in the aspects of setting up a business as well as sustaining it through the current digital era. . A recent survey conducted by Bharatiya Yuva Shakti Trust among rural MSME entrepreneurs has revealed information about the challenges faced by them.
Top challenges faced by grampreneurs
Dealing with complexities related to managing and filing commercial taxes, lack of awareness about the associated costs, time requirements and minimum capital investment, and a significant knowledge gap regarding Goods and Services Tax (GST), grampreneurs face challenges. There are top challenges ahead. Moreover, it has also been observed that very few grampreneurs are adopting digital payment methods and similarly there are limited number of those taking advantage of e-commerce platforms.
Bharatiya Yuva Shakti Trust, an organization promoting innovation and economic empowerment for aspiring young rural entrepreneurs, believes that keeping in mind the hurdles faced by entrepreneurs at the grassroots level, the government should provide financial assistance to rural entrepreneurs to set up businesses and manage taxes. We should increase our efforts to provide training about
What should be the measures?
To enhance their digital capabilities, rural entrepreneurs should be trained to use digital public infrastructure efficiently. Rural MSMEs are a storehouse of untapped potential which, when unlocked, will propel the country to maintain its position as one of the fastest growing economies. They can be given interest rebate of 2-3 percent. Or for manufacturing micro units with credit limit up to Rs 25 lakh, benefits such as back-end capital subsidy of 5-10 per cent of the sanctioned loan amount should be considered.
The annual guarantee fee should be subsidized to the extent of 25-30 per cent as applicable for North Eastern States and micro manufacturing units should be allowed with a credit limit of up to Rs 25 lakh (loan accounts which are regular). This will encourage banks to give more loans.
