With the pandemic wreaking havoc on economies globally, the budget was awaited by Medium, Small, and Micro Enterprises (MSMEs) with bated breath. The finance budget 2022-23 was presented by the Union Finance Minister, Nirmala Sitharaman, on February 01, 2022. Like any other sector, the MSME sector had certain expectations from the financial budget for 2022.
Understanding budgeting for beginners – the financial budget is also known as the annual financial statement or the union budget and is presented by the government of India each year. Article 112 of the Indian Constitution defines it as a statement of the estimated receipts and expenditures of the Government of India for that year.
The ongoing COVID-19 pandemic is in its third wave and has beaten India’s already distressed MSME sector. The MSME contributes significantly to the Indian economy as the Gross Value Added share of MSMEs in India’s GDP for 2019-20 stood at 30%. The sector suppressed by the COVID-19 infections expected the budget to pull them out of the gloom.
Here were the main expectations that the MSMEs had from the finance budget for 2022:
- Optimism for Banking Industry
The NBFC plays a key role in enhancing the banking sector. People were hopeful that the annual budget would offer the much-needed push to the Indian economy after the degradation and downturn caused by the pandemic in the last two years.
- Easy access to credit
The MSMEs expected easier access to credit; hassle-free credit has been a perennial problem. Measures for hassle-free credit to MSMEs were a key expectation from this budget to enable the ease of doing business, level the playing field for MSMEs, bring down the cost of doing business and ensure on-time justice for the people of this sector.
- Increased Apportionment in Healthcare Sector
After the pandemic, there were high expectations for the healthcare sector in the 2022 budget. This would involve significant healthcare sector resource allocation encompassing the entire industry’s infrastructure, the key focus being on a dependable medical cold chain for the victory of any National Immunization Programme. This would equip the country to prepare well to take on the pandemic and fight any future crisis.
- GST Rationalization
The current raw material prices are quite exorbitant, and these prices are neither controlled nor uniform. To solve this, the expectation from the government was to justify the GST on manufacturing for the MSME sector. Specialists in this field believed that the GST for manufacturing should be brought down from 18% to at least 12%.
- Recapitalization of Public Sector
There was optimism regarding an impetus to the overall credit demand across the country. The focus should be on achieving reasonable rental housing while supporting the current financing systems to make liquidity available for stuck real estate projects.
An industry leader and value creator in his field, Sanjiv Bajaj the Chairman & Managing Director of Bajaj FInserv has been an avid propagator of digitization and technology for value creation in any industry. The digital world is changing, and this budget has covered key areas like innovative ways of funding for MSMEs getting the private sector and entrepreneurs to build strong foundations. Other aspects related to digitization are sowing the seeds for the future.
The best business entrepreneur in the finance world trust that the budget has sowed the right seeds of digitization. By creating the right environment, innovations can occur right here. Finance budget 2022’s verdict to fund the supply side of businesses will create more job opportunities that will eventually fill the pockets of the people at the bottom of the pyramid who will create the demand.
All in all, the Finance budget for 2022-23 is believed to be very forward-looking, especially for MSMEs and the overall growth of India for the next 25 years.
MSMEs eagerly awaited the budget of 2022-23 to receive the much-needed financial and digital impetus that was required to bring them out of the pandemic slump. Finance Minister Nirmala Sitharaman stated that the Emergency Credit Line Guarantee Scheme (ECLGS) had helped over 130 lakhs MSMEs mitigate the pandemic’s adverse impact. Since the pre-pandemic level was yet to be attained, the ECLGS cover has been expanded by Rs. 50,000 crores to a total of 5 lakh crores till March 2023. This required infusion of funds will revamp the MSME sector.
According to finance leader Sanjiv Bajaj, this budget was a good one that focused on continuity and reform. He has described it as a new age budget that introduced initiatives for incentivizing and funding MSMEs and start-ups, thereby strengthening ‘Make in India’, which is sowing the seeds for the country’s growth for the next 25 years. Through concentrated infusion in the infrastructure sector, the economy will expand, there will be job creation and eventually consumption; this concentrated funding will act as a force multiplier and be a boon for India when executed in the right manner.