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Last updated: 06 Feb, 2018  

budget-indiaTHMB.jpeg Budget boost to MSMEs

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Bikky Khosla | 06 Feb, 2018

Union Finance Minister Arun Jaitley presented the Budget in the Lok Sabha last week. This is the current government’s last full Budget and therefore its focus on agriculture and the rural sector is quite expected. Some analysts took no time to dub the Budget as an election budget. On the other hand, some others are of the view that the Finance Minister has done well to limit the fiscal slippage, though the fiscal deficit target is now revised to 3.3 percent of GDP in the next fiscal.

Amid these debates, analysts, however, widely agree that the Budget 2018 is MSME-friendly. First and foremost, it cuts corporate tax rate to 25 percent for companies with turnover of up to Rs 250 crore. This is good news for the sector, which accounts for almost 99 percent of companies filing their tax returns. GST and demonetisation have adversely affected the cash flow of the small enterprises and now the corporate tax respite will help mitigate these adverse effects. Additionally, employment generation will also get a boost.

In another positive move, the Budget allocates Rs 3,794 crore for credit support, capital and interest subsidy for the MSMEs. Similarly, allocation of Rs 1006 crore for the National Manufacturing Competitiveness Program is a welcome move. It will help the sector in technology up-gradation. Also, Rs 3 lakh crore has been earmarked under Mudra Yojana. Additionally, allocation has been increased to Rs. 415 crore under Khadi grant, Rs. 125 crore under SFURTI scheme, and to Rs. 232 crore in under under ASPIRE scheme.

Apart from tax benefits, the Budget also addresses some structural issues and ease of doing concern. It proposes to bring public sector banks and corporates on the TReDS platform and link it to GSTN. This facility will help MSMEs to access capital by discounting their trade receivables. Additionally, it has also been proposed to provide a unique identity to every enterprise, a move that will make credit assessment easier and faster. Also, 12 percent EPF contribution for select sectors and extension of the facility of fixed term employment are welcome proposals.

I Invite your opinions.

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