New Delhi, Feb 1 (KNN) The Union Budget (2020-21) has brought cheers in MSME world.

“It attempts to address three pain points of MSMEs: financing of receivables,  need of additional funds while growing and reducing compliance burden among the informal enterprises”,  highlights Dr. Animesh Saxena, President, Federation of Indian Micro and Small & Medium Enterprises (FISME).     

Opening doors for NBFCs to finance invoices uploaded by MSMEs at Trade Receivables and Discounting System (TReDS) will give a big boost to these platforms.  It was one of the suggestions given by FISME to the Finance Minister for rapid growth of TReDS platforms and increase the cumulative turnover of these platforms over One lakh crore in next 18 months.

To address the need of additional Working capital needed by fast growing enterprises, a scheme to provide subordinate debt for MSMEs has been proposed in the budget.  This subordinate debt to be provided by banks would count as quasi-equity. As it will not be secured debt it has been proposed to be fully guaranteed through the Credit Guarantee Trust for Medium and Small Entrepreneurs (CGTMSE).  It would allow MSMEs to raise funds without bringing in additional collateral securities.

Raising the statutory tax audit threshold from Rupees one crore to five crore will come as a welcome relief for large number of traders.

According to FISME, it is a welcome step but the rider that the enterprises should not have more than 5% of turnover in cash will restrict its uptake.

While applauding the proposition of extending the restructuring scheme for another one year, FISME expressed dissatisfaction on restructuring exercise and asked for a complete overhaul of the scheme.

With emphasis of the Budget on enhancing spending by increasing rural income and reduction in personal income tax and at the same time giving boosting shot through massive investment in infrastructure, the Budget will induce growth without undermining fiscal prudence.  

‘With rise in GDP growth, MSMEs will also benefit as producers and suppliers’, says FISME. (KNN Bureau)

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