Govt steps moderated pandemic impact on small businesses, says Survey

Small businesses in India have recovered from the Covid-19-induced shock, as was evident in their payment of goods and services tax, which crossed the pre-pandemic level in FY22, according to the Economic Survey for FY23.

Credit to micro, small and medium enterprises increased significantly, in part assisted by the Emergency Credit Linked Guarantee Scheme (ECLGS).

“Growth in credit to MSME was buttressed by rebounding consumption levels, particularly in the services sector. Consequently, the share of MSMEs in gross credit offtake to the industry rose from 17.7 per cent in January 2020 to 23.7 per cent in November 2022,” the Survey said.

Additionally, there was a bouquet of measures introduced by the government to boost MSMEs.

The Centre introduced several measures as part of its Aatmanirbhar Bharat Package to moderate the impact of the pandemic effect on the MSME sector, including modification of the definition of MSMEs, a provision of Rs 20,000 crore subordinate debt for stressed MSMEs, Rs 50,000 crore equity infusion through Self-Reliant India Fund, waiving of the global tender requirement for procurement of up to Rs 200 crore, and the launch of the Udyam portal for MSME registration, a paperless, zero-cost registration portal that is based on self-declaration and only requires Aadhaar.

Registrations on the Udyam portal crossed the 10 million mark in August 2022, surpassing the total registration of the past 14 years under the old regime in just 2.5 years.

Enterprises registered on the portal employ 96 million people, of which 23 million are women. There are 150,000 exporting units, which have contributed a cumulative Rs 9.7 lakh crore worth of shipments.

Cashflow problems

The Samadhaan portal, set up under the Micro, Small and Medium Enterprises Development (MSMED) Act to monitor outstanding dues to the sector, is helping to resolve their cashflow difficulties.

“As of January 7, 2022, the portal has received 1.3 lakh applications, of which 16.8 percent have been disposed of, 25 percent are under consideration, and 25.1 per cent have been rejected. In order to fast-track this process, the government has instructed central public sector enterprises and all companies with a turnover of Rs 200 crore or more to get themselves onboarded on the Trade Receivables Discounting System (TReDS) platform for facilitating the discounting of trade receivables of MSMEs through multiple financiers,” the Survey pointed out.

The government also started the Raising and Accelerating MSME Performance Scheme (RAMP), according to the Survey, which was intended to strengthen institutions and governance at the Centre and states. A World Bank-supported scheme, it is proposed to be implemented over a period of five years.

The total outlay for the scheme is Rs 6,062.4 crore, of which Rs 3,750 crore would be a loan from the World Bank and the government would fund the remaining Rs 2,312.4 crore.