The government has proposed to spend a record Rs 22,138 crore on allocations aimed at micro, small, and medium enterprises (MSMEs) ministry in the Budget 2023-24, giving a boost to employment in the country.
Finance Minister Nirmala Sitharaman presented the budget, the last full budget of the Modi government before the general elections in early 2024, in Parliament on February 1. India’s fiscal year runs from April 1 through March 31.
The proposed allocation for the MSME ministry is higher than the revised Rs 15,628 crore for the current fiscal year, which was lower than the budget estimate of Rs 21,422 crore, budget documents showed.
MSMEs, which contributed over one-fourth to India’s gross value added in 2020-21, are among the biggest employers in the country at an aggregate level, according to experts.
Several firms in the sector have seen stress in recent years due to the formalisation of the economy and the coronavirus pandemic.
The government has taken a number of steps recently to support MSMsE, including the emergency credit line guarantee scheme, equity infusion through MSME Self-Reliant India Fund, revised criteria for the classification of these enterprises, cessation of global tenders for small-ticket procurements, and extension of non-tax benefits, among others.
The MSME sector is charting a new story as the pandemic eases, with post-Covid credit growth being consistently higher on a year-on-year basis as well as in comparison with credit growth to large industries, a recent report by the State Bank of India’s research wing said.
Incentives provided by the emergency credit line guarantee scheme were boosting credit flow and there was evidence that MSME units were becoming larger, SBI research said.
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