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Interim Budget 2024: MSMEs want to see execution of policies, express cautious optimism on announcements



The MSME sector is a significant link in India’s journey to become a $5-trillion economy. Giving a focus to this sector, Finance Minister Nirmala Sitharaman unveiled measures that underscored the importance of ensuring adequate finances, as part of her Interim Budget speech in Parliament today.
“It is an important policy priority for our government to ensure timely and adequate finances, relevant technologies and appropriate training for the micro, small and medium enterprises (MSME) to grow and also compete globally. Orienting the regulatory environment to facilitate their growth will be an important element of this policy mix,” the FM stated.
Another measure was the announcement to establish a corpus of Rs 1 lakh crore that will give 50-year interest-free loans to tech-savvy youth. “It will be for long-term financing or re-financing with low or nil interest rates,” Sitharaman added.
Credit woes continue to haunt the sector and act as a major roadblock to their potential. As per a thought paper by investment banking company Avendus Capital on MSME lending in April 2023, the MSME sector in India is estimated to have a massive credit gap of $530 billion. MSMEs that ET Digital spoke to said that they expected more clarity in this budget on certain measures. “There was an announcement recently that credit from MSME vendors has to be paid back within 45 days to claim the same as accrued in books of account. A clarification and explanation on this during this budget speech would have clarified a lot of opinions,” says Jayanth Mutha, Director of agri-electricals company Himlite Products.Mutha adds that he was eager to hear more on the status of the measures undertaken so far. “MSMEs will have to wait for a few months to hear something positive as this budget mentions the intent of the government but not any action. As an MSME, I would have liked to understand more about what was promised earlier and how much of that was availed, and how many MSMEs actually benefited from it,” he states.Arun Poojari, Co-founder and CEO of digital supply chain finance platform Cashinvoice, spoke about how further structural reforms that aim to empower MSMEs through innovative financial solutions can be expected in the full budget announcements in July. “Technology is a linchpin in realising the goals outlined in the interim budget, with a spotlight on empowering MSMEs and propelling overall economic growth. The integration of technologies such as GSTN, e-invoicing, and e-way bill data is poised to play a pivotal role in facilitating invoice-based financing for MSMEs,” he says. Other MSME experts expressed cautiousness in some of the announcements. Girish Mudgal, Director, Timetooth Technologies, says that while the intent of the government is in the right direction, it remains to be seen how the measures are executed. “The intent of the government is along the right directions, which is critical for technology development in India by MSMEs. However, we have seen in the past that the execution machinery is just not able to deliver the same,” he adds, while commenting on the announcement in the Budget of a new scheme that would be launched for strengthening deep-tech technologies for defense purposes.

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“We welcome this Budget’s initiative of incentivising the defence deep-tech industry. With cautious optimism, we look forward to an efficient execution of this Budget to the MSME deep-tech sector,” he adds.

The interim budget is a provisional financial plan presented during an election year to address the immediate financial needs until a new government is elected. It generally refrains from making significant and far-reaching policy declarations.



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