Bikky Khosla | 03 Mar, 2015
The Budget is over. During the last few weeks we discussed a
number of issues facing the micro, small and medium enterprise sector. The
expectations were high and if we compare them now with what has been offered in
the Budget 2015, we will obviously find a number of pain points. There are no
big bang reforms and not enough tax sops. Increase in service tax, cut in MSME
ministry budget for some key schemes, lack of specific guidelines on skill
development are some striking drawbacks.
On the other hand, it will be wrong to say that the Budget
is all about negatives. We all know that availability of low-cost credit is
critical to growth of the MSME sector and the decision to set up Mudra Bank
with a corpus of Rs. 20,000 crore is a welcome one in this regard. Similarly,
it is encouraging to see allocation of Rs 1,000 crore for technology start-ups.
In addition, a credit guarantee fund of Rs 3,000 crore will help small business
units to fight their funding needs to some extent.
There is another positive measure the Finance Minister
states in his Budget speech: the government will unveil a comprehensive
Bankruptcy Code by 2015-16. The new code will meet global standards and provide
necessary judicial capacity. Such a step will certainly contribute to the
improvement of the business environment. In addition, the proposal to help
MSMEs get rid of the irritating problem of delayed payment by setting up a
system for financing of their trade receivables is another good idea.
On tax front - although increase in service tax and absence
of MSME sector-specific tax relaxation is unfortunate - I think the Finance
Minister set a positive note on implementation of GST from April 1, 2016. In
addition, the effort to move towards the new tax regime is also evident in some
proposals for changes in the indirect tax system, such as subsuming of
Education Cess and the Secondary and Higher Education Cess in Central Excise
duty and permission to issue digitally signed invoices and electronic records.
I hope the government will be able to undertake this transition in a systematic
manner and the GST roll-out will not miss the deadline again.
In addition, what I view as another big positive of the
budget is the proposal to increase allocation for capital spending in the
infrastructure segments. This will not only help the industry, including the
MSMEs, but will also have a very positive impact on our socio-economic
scenario. In addition, the proposal to widen the social security net through
insurance and pension schemes is another praiseworthy move. The relaxed fiscal
target also sounds logical as it will give some room to hike infra spending and
meet the Finance Commissionâs recommendations to transfer more revenue to the
Overall, the Budget seems a balanced one, but having said
this I still want to repeat one thing again - it clearly falls short of the
struggling MSME sector's expectations, and I hope some strong initiatives will
be announced in the course of the year to adequately compensate for this. I
invite your opinions.