Budget inspired by three kartavya

In her Budget, the first one that was prepared in the new ‘Kartavya Bhawan, Finance Minister Nirmala Sitharaman talked about how the Government was inspired by ‘three kartavya,’ the first of which was to accelerate and sustain growth. One of the crucial ingredients of this was to create ‘Champion MSMEs.’

To help some of the Ministry of Micro, Small and Medium Enterprises (MSMEs) to become “future Champions,” the Budget pinpointed a three-pronged approach, which included support related to equity, liquidity, and professional issues. "The Budget has laid clear focus on the development of MSMEs. This will aid the proliferation of small and medium enterprises across sectors, support spatial development of sectors, while creating real estate opportunities," says Vimal Nadar, director, Colliers India. 

The focus on MSMEs is for two reasons. The first, as the finance minister said in her speech, was the recognition that MSMEs were a “vital engine of growth.” The second, which was highlighted by the Economic Survey, was because MSMEs, especially mid-sized firms are the worst impacted during periods of disruptions, crises, and geopolitical tensions, as is evident these days.

To bolster equity, and investment capabilities, Sitharaman proposed a new SME Growth Fund, a Rs 10,000 crore dedicated to incentivise select firms. In addition, she said that she would “top up” the existing Self-Reliant Fund with Rs 2,000 crore to provide “support to micro enterprises, and mainstream their access to risk capital.” With higher equity inflows, the balance sheets of the MSMEs will become stronger, which will enable them to raise more money through loans, and other sources.