Budget 2019: MSMEs Can Create 1 Million Jobs Per Month
MSMEs hold the key to unlock the employment potential of India
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Nirmala Sitharaman is all set to table the Union Budget 2019 on July 5 and the Micro, Small and Medium Enterprises (MSMEs) have big hopes from the government to fend some of their demands. The sector is not called the backbone of Indian economy for nothing. Not only it contributes 29 percent to the nation's GDP but also employs over 100 million people.
Employment – A Game Changer
A CII survey recently revealed that the MSME sector created the most number of jobs in the country in the last four years. Talking about how employment can be a page turner for the nation, Balkrishan Goenka, the President of Assocham states that the definition of SME has to be changed on the basis of employment & turnover.
He is of believe that the sector can create 1 million jobs every month but the need for Tax Neutrality by the government leads the game. "To create employment in India, there is good potential in the Tourism Industry," he said. Being from Textile sector primarily, he told the media present that Textile business is also seasonal in nature and the labour is required accordingly but it creates employment nonetheless.
Credit Guarantee – A Must
The sector has suffered from credit crunch like no other. However, the government is committed to support entrepreneurs in the form of credit guarantee schemes and easing of regulatory requirements. In the Interim Budget, the government increased allocation to Interest Subvention Scheme for Incremental Credit to MSMEs by 25 per cent over the previous year's allocation.
Arun Singh, the Lead Economist of Dun and Bradstreet believes that due to the current slowdown in MSME credit, the government would announce further measures to improve the ease of access to finance for MSMEs. "An increase in the target for lending under Pradhan Mantri MUDRA Yojana (PMMY) is anticipated," he stated.
Anticipated Welfare Schemes
Singh proposed new schemes that provide collateral free loans of up to INR 5 million under PMMY or the existing ceiling of INR 1 million to be raised. "Some measures to improve the welfare of small traders, such as establishment of National Traders' Welfare Board, creation of a National Policy for Retail Trade and a scheme on the lines of Kisan credit card and providing merchant credit cards to registered merchants are also likely," he stated.
The government should give confidence to NBFCs to alleviate current liquidity crisis for SMEs. "We are not talking about operating issues but in case of macro events like global liquidity squeeze. Government should dedicate funds in the Digital India Program for complete digitization of loan documentation and processing. This will reduce the cost of credit and fasten the access to credit," shared Gaurav Anand, co-founder & Director, Namaste Credit.