The Union Budget, presented by the Finance Minister last week, focuses on three pillars: inclusive welfare, digital transformation and sustainability and leveraging private investments – which can have a potential impact on the MSME eco-system in the country. Also, the Budget introduces several friendly measures for the Covid-hit sector, which has been in dire need of additional support to bounce back.

One of the major Budget announcements is the Rs 6,000- crore Raising and Accelerating MSME Performance programme, which will be rolled out in the coming five years. The World Bank in June 2020 approved a $750 million MSME Emergency Response programme and RAMP is the second intervention by the global agency. The Finance Minister said the programme would improve the competitiveness and productivity of MSMEs.

Also, the decision to extend the Emergency Credit Line Guarantee Scheme (ECLGS) till March 2023 is a welcome step. It will help the MSME sector to get a much-needed relief, particularly with increase in outlay of the fund to Rs 5 lakh crore. In a similar line, additional credit support of Rs 2 lakh crore by revamping of the Credit Guarantee Trust for Micro and Small Enterprises (CGTMSE) is another encouraging step.

Some other important Budget measures taken for the MSME sector including, linking of portals - Udyam, e-shram, NCS & Aseem portals, increased focus on digital banking, payments and fintech, launch of EoDB 2.0 to reduce compliance burden, decision to make 25% of defence spending available for startups, etc. are worth mentioning. It will be interesting to see how effectively the government implements these measures for the sector in the coming days.