With this year’s Union Budget just a few days ahead, I believe it’s a good time to discuss what the MSME sector expects from the Finance Minister. I think a lot has been discussed in our earlier editorials about what plagues the sector, but today I would like to focus on how the Finance Minister in her upcoming Budget can help this important sector in mitigating at least some of these hurdles.

Like everyone in the MSME sector, I am hopeful that favourable measures in the Budget will alleviate the challenges of MSMEs to a great extent.

The Budget should invariably have provisions wherein the government can expand and strengthen existing schemes, like the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) and the Pradhan Mantri MUDRA Yojana. By doing so, it can significantly broaden their reach, allowing more businesses, particularly in rural areas, to access collateral-free credit. Also an increase in allocations for other schemes such as CGTMSE and Mudra Yojana will also go a long way in helping our small businesses.

I would like to draw your attention to a recent report which has revealed that our country’s MSMEs today face a credit gap of $530 billion, and that only 14 percent of the 63 million small businesses actually have access to credit – not a very rosy picture I would say. And sadly this $530 billion financing gap attributes primarily to systemic challenges within the country’s banking and financial systems.

So introducing new schemes in the forthcoming Budget which are focused on financial support for labour-intensive sectors can not only create employment opportunities, but also help businesses grow manifold.

I would probably go a step further and say that it’s high time the government launches a government-backed digital MSME lending platform, which focuses on lending to small businesses solely. If done, it will definitely help improve access to credit for MSMEs and which ultimately will help reduce the financing gap.

While I expect new announcements to help the sector, I strongly feel that the Finance Minister also has something in the Budget to ensure the implementation of announcements made in the previous Budget. In her earlier Budget Mrs. Sitharaman had announced a review of Special Mention Account (SMA) norms. She had also announced that there would be no BLR ratings and that surety bonds could be used instead of bank guarantees. It is time these announcements see the light of day without any further delay.

I invite your opinions.