To achieve the goal of $5-trillion economy, focusing on the 63 million SMEs/MSMEs is a must. Ninety four per cent are small, 4.5 per cent are micro and only 1 per cent are in the medium sector. They contribute 30 per cent to the GDP and most important employ 110 million.
The first challenge is to get the micro/small and medium MSMEs registered. On date 13.5 million units are registered in Udyam portal. The Budget to provide mechanism for linking of urban data base of street vendors and shops will enable faster registration and better targeting.
This repository will enable to understand specific needs and issues related to the group. It will enhance coverage of schemes for better skilling, adaptation to new technologies, credit access and expansion of markets by resorting to standardisation and immediate market feedback mechanisms. MSMEs are still to recover from the pandemic and demonetisation blows. They make up the lower half in the ‘K-shaped’ growth process. Their issues can be addressed if the Budget flags and focuses on them. They need some out-of-the box steps, such as:
(i) To start with, the budget for ‘skilling’ India should be diverted to allow apprenticeship in micro enterprises, SMEs and MSMEs with cost of stipend being borne by the government for one year. Reskilling for rescaling the enterprise and the existing labour force should also be a part of this endeavour. The skilling budget should be executed through registered MSMEs. This will encourage MSMEs to register and take advantage of ‘apprenticeship’ programme. This should be a part of shop and establishment rules.
(ii) The next challenge is for the labour department to recognise ‘part time workers’. These workers must be recognised as labour force and entitled to EPF and medical benefits. Part time work will be the new normal and needs to be addressed in the four codes.
(iii) GST harmonisation is an immediate need with single slab of 5 per cent to micro and small enterprises and 12 per cent for medium enterprise with an exemption to those with a turnover less than ₹2 crore.
(iv) Policies for export focus more on large enterprise. MSMEs need a ₹3,000-4,000-crore fund to facilitate access to export avenues.
(v) Easier line of credit with faster access can become a reality if the urban development and MSME departments work together, pooling databases.
(vi) A pathbreaking step will be to allow expenditure of CSR to the ancillaries of the industry to handhold them to automate, board e-commerce platforms, improve their manufacturing and market practices.
(vii) The ₹20,000-crore Credit Guarantee Scheme for Subordinate Debt (CGSSD) launched in June 2020 to support stressed MSMEs or non-performing asset (NPA) accounts is yet to attract a sizeable number of potential beneficiaries.
In fact, the beneficiary count has dropped 37 per cent from 473 in 2020-21 to 298 in FY22.
The total beneficiary count under CGSSD stood at 771 as of March 2022. According to the MSME Ministry’s FY22 annual report, the scheme had extended guarantees amounting to ₹81.78 crore to 756 borrowers as of December 31, 2021, indicating only 15 new beneficiaries till March this year.
The writer is former secretary, GoI
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