On February 1, 2023, Union Finance Minister Nirmala Sitaraman presented the Union Budget 2023-24. The FM opened her speech by saying that since 2014, the government has given a better quality of life to the citizens of India.
Expectations from leading economists and industry experts were that the government would introduce reforms that are focused – on achieving higher growth rates on a sustained basis. On the broader front, it was predicted that this year’s budget will look at promoting growth would work towards recovering from the impact of the global economic slowdown on the Indian economy.
What are some highlights that will have an impact on MSMEs and entrepreneurship?
Focus on promoting women entrepreneurship
Union budget 2023-24 focused on branding and marketing of artisans and tourism, which showed that the Government was moving ahead to promote branding for women’s entrepreneurship, tourism.
Referring to artisan businesses, the government would promote general artisans through components such as financial support, skill training, modern green technology, brand promotion and linkage with local and global markets. Through the actions mentioned above, the government aims to aid scheduled castes (SCs), scheduled tribes (STs), other backward castes (OBCs), women, and people belonging to the economically weaker sections, the Minister elucidated.
Boosting credit, simplifying taxation for MSMEs
The MSME industry, which has been the driving force of the Indian economy, had expectations to recover from the slowdown experienced during the last two years, and was looking at registering significant growth in the near future.
Government’s top priority seems to be boosting credit and simplifying taxation for MSMEs. So, credit and finance for MSMEs was top-of mind.
Special budgetary assistance for MSME women entrepreneurs
It was seen that women entrepreneurs from rural areas have shown immense potential – to add value to the Indian economy by entering the MSME sector, despite having limited resources and lesser opportunities. Now, the finance scheme targeted towards women MSME entrepreneurs like PMAY, for ticket sizes above INR 1 million, will encourage inclusivity and accelerate their entrepreneurial journey.
The FM also pointed out that an entity Digilocker will be set up for use by MSMEs, large businesses and also charitable trusts. This would work towards storing and sharing documents online securely, whenever needed with different authorities, she elaborated.
In a major relief to MSMEs, she also presented another helpful initiative – in case of MSMEs failing to execute contracts during the COVID period, 95% of the forfeited amount relating to the bid or performance security, would be returned to them by government and government undertakings.
Scope in the Tourism sector
Stressing on the India’s immense attraction for domestic as well as foreign tourists, the FM reiterated that there is a large potential to be tapped in tourism, as the sector holds huge opportunities for jobs and entrepreneurship for youth in particular. So, promotion of tourism will be taken up on a mission mode.
Savings & deposits
New small saving schemes for women – Mahila Samman, was also underlined in the Budget speech. Mahila Samman Bachat Patra – a one-time small savings scheme called ‘Mahila Samman Savings Certificate’ will be made available for a 2-year period upto March 2025. This will offer ₹2 lakh for women and girls for 2 years at a FD rate of 7.5% with partial withdrawal option.
Support for startups
Another major highlight was that a national data governance policy would be brought out – to unleash innovation and research by startups. Hailing start-ups as “drivers of growth for India’s economy,” the tax incentives were announced. “It will enable access to anonymous data. The KYC process will be simplified and will be adaptive to a sense of risk based, rather than one-size-fits-all. Financial sector regulators will also be encouraged to have KYC system fully amenable to the needs of Digital India,” the FM stated.
Earlier, start-ups incorporated between April 1, 2016, till March 31, 2021 – were eligible for this tax benefit scheme. This has now been extended by 1 year till March 31, 2023, due to the Covid-19 pandemic.
The FM also proposed to increase the benefit for startups – of carrying forward losses from 7 years to 10 years. “Entrepreneurship is vital for a country’s economic development. We have taken a number of measures for start-ups and they have borne results. India is now the third largest ecosystem for start-ups globally, and ranks second in innovation quality among middle-income countries,” she declared.
The government has moved consistently to promote startups in the country. The Startup India initiative, Fund of Funds for Startups (FFS) scheme, Startup India Seed Fund Scheme (SISFS) and Credit Guarantee Scheme for Startups (CGSS) – all are implemented to provide capital at various stages of the business cycle of a startup.
And in 2016, the government launched Startup India initiative aiming to build a strong ecosystem – for nurturing innovation and encouraging private investments in the startup ecosystem.
Avtar Madan
Himanshu
Shree Lahiri
