MSMEs are set to receive incremental business worth around Rs2 trillion out of the Rs3 trillion allocated to the sector in the Budget, a report says.
The Rs3,02,885 crore allocated towards the MSME sector can lead to a direct benefit of Rs2,00,000 crore to the sector, according to domestic rating agency Smera Ratings.
These benefits are roughly 10.5 per cent of the total expenditure of the Budget estimate for 2016-17, the agency said in a note.
The Rs 60-trillion MSME sector contributes a whopping 37.5 per cent of GDP and employs the most number of people.
This allocation is divided between consumption and investment categories.
A sum of Rs95,638 crore will go into consumption and Rs2,07,247 crore to investment, it said.
The agency opines that MSME engagement will be crucial in the implementation as both manufacturing and services based MSME units will take advantage of this massive mobilisation of public finances.
On a standalone basis, the agency estimates that Rs1,05,647 crore worth of business can be exclusively conducted by MSMEs.
The agency feels that implementation of various schemes such as Pradhan Mantri Gram Sadak Yojana, Kaushal Vikas Yojana, Swachh Bharat Abhiyan, MGNREGA and Khelo India may not require the participation of large companies.
Out of the total funds, Gram Sadak Yojana will attract Rs19,000 crore, Swachh Bharat Abiyan will get Rs11,300 crore, and roads and highways Rs26,250 crore.
Moreover, MGNREGA will get Rs 15,400 crore (by way of materials), Krishi Sinchai Yojana Rs 2,144 crore and the National Rural Drinking Water Mission has been allocated Rs1,875 crore.
Child development schemes will get Rs16,120 crore, Khelo India Rs216 crore and Gram Jyoti Yojana Rs3,188 crore.
The opportunity created by the Budget will create demand for services of the MSME sector, it said.
The additional infusion of funds into Mudra and the proposed establishment of 1,500 multi-skill training institutes under the Kaushal Vikas Yojana will facilitate this process further, says Karan Mehrishi, lead economist at Smera Ratings.