Can Budget 2023 boost MSME sectorand target job creation?

In India one of the major employers in the country is the MSME sector. Budget 2023 can address some of the major summons is impeding the growth of MSMEs. MSMEs are a critical cog for the manufacturing wheel and needs special attention as India focuses on more domestic production.

The government, earlier, has announced major reforms to support the MSME sector including change in the definition that will ease the compliance burden. A slowing of exports due to tough economic conditions globally will merit more attention to be paid to the sector.

A big boost to the MSMEs can come in the form reduction in the cost of doing business. Right now, raising capital at affordable rates is a major challenge before the sector. The sector struggles from funding issues like delayed payments from buyers.

Industry body PHDCCI feels that finance is one of the major roadblocks before the MSME sector and hurts its competitiveness.

It has flagged the current banking norms which seek high primary security and collateral demand.

"Focus of the government should be on hassle-free disbursements of loans at affordable rates of interest for the businesses vis-a-vis enhanced liquidity for micro, small and medium enterprises (MSMEs), suggested the chamber," the chamber said.

Anil Bhardwaj, Secretary General of the Federation of Indian Micro and Small & Medium Enterprises (FISME), said that the banks should be capable to appraise MSMEs and the need to have a credit rating from an agency only adds to the costs.

Health of MSMEs is important as they play a pivotal role in exports and employment generation. As India pushes for more domestic manufacturing, it needs to get the supplier network in place. It can only happen if the MSMEs don't stumble.