The eagerly awaited Union Budget 2023 was tabled in the Parliament last week. Overall, it seems to be a balanced Budget, amid tough global economic condition, with inflation and rising interest rates hitting several major economies in the world. Of course, India is being touted as to be the global bright spot, but several challenges are still facing the domestic economy as well, and in the background of this the Budget seems to be a well thought-out and not a populist one.

Ahead of the Budget, our MSME sector raised several demands, and although the budgetary announcements failed to address them all, there are several proposals that deserve mention. Most notably, the decision to revamp the credit guarantee scheme for MSMEs is a welcome one. The new scheme will come to effect from April 1 and infusion of Rs 9000 crore will result in additional collateral-free guaranteed credit of Rs 2 lakh crore as well as reduction in cost of credit by 1 percent.

In another welcome step, the Budget comes with an innovative solution to address the delayed payment challenge facing the sector. It was announced that the government will now allow expense deduction by the buyers only when payments are actually made. The MSME Samadhan scheme failed to help the sector much, but now buyers will not be able to claim deduction without paying – a measure which is expected to ensure timely payments to MSMEs.

The MSME sector also hailed the proposal to set up a National Financial Information Registry for creating a robust information system for the sector. It is also encouraging that the Finance Minister extended the benefits of presumptive taxation to micro-enterprises with a turnover of up to Rs 2 crore. However, while these measures are welcome, they hardly seem to be enough, particularly considering the plethora of problems plaguing the sector which contributes a third of GDP and half of the country’s exports to the economy.

I invite your opinions.