AITF doubts desired impact of slashing of Customs duty on steel

Ludhiana, Feb 2 (KNN) Though the Micro, Small and Medium Enterprises (MSME) bodies have welcomed the Union Budget 2021-22, but it seems that the same has annoyed the All Industries Trade and Forum (AITF), which termed it as a 'big blunder'.

''The Union Budget 2021-22 is a big blunder for the MSMEs as the government claimed to double the funds to the MSME’s from Rs 7279 crore to Rs 15629 crore,'' Badish Jindal, national president, AITF said.

''The fact is that the only increase in the Budget is of Rs 10000 crore funds that is to be issued as interest subvention on the Guarantee Emergency Line of Credit given during the Novel Coronavirus. Whereas, the actual grant to the MSME ministry has been reduced from Rs 7279 crore during 2020-21  to Rs 5629 crore for 2021-22. So, the budget allocation to the MSME’s has been decreased by 23 per cent as compared to the previous budget,'' he added.

According to him, the budget for all the schemes of MSME ministry had been reduced. These include:

The Prime Minister Employment Guarantee scheme, for which the budget was reduced from Rs 2500 crore to Rs 2000 crore; Credit Linked Capital Subsidy and Technology Upgradation Scheme from Rs 1080 crore to Rs 315 crore; Credit Support Programme to MSMEs from Rs 555 crore in 2019-20 to Rs four lakh during 2021-22; Interest Subvention Scheme for Incremental Credit to MSMEs Rs 350 crore to Rs 199 crore; Promotional Services Institutions and Programme Rs 258 crores to Rs 176 crore; MSME Fund Rs 50 crore to Nil; Infrastructure Development Programme (Cluster Development) Rs 1460 crore to Rs 1107 crore;  Development of Khadi, Village and Coir Industries Rs 1525 crore to Rs 905 crore; Procurement & Marketing Support Scheme Rs 79 crore in 2019-20 to Rs 24.96 crore; International Cooperation Scheme from Rs 20 crore to Rs 15 crore and ASPIRE (Promotion of Innovation, Rural Industry and Entrepreneurship) from Rs 30 crore to Rs 15 crore.

''For political reasons shockingly, the support contributions to the North Eastern States has been increased from Rs 758 crore to Rs 1457 crore, whereas for rest of the states, it has been decreased from Rs 215 crore to nil,'' he asserted.

Mr Jindal further added that even the budget of Ministry of Skill Development has been reduced from Rs 3002 crore in 2020-21 to Rs 2785 crore for 2021-22

Commenting on the Budget deficit, he said that the budget deficit of Rs 184865 crore (9.5 per cent) for the year 2020-21 and is one of the highest in the history of India and for the year 2021-22, it is proposed to be Rs 1506812 crore (6.8 per cent).

''The sum total of both the deficits is more than the annual plan budget of India,'' he added.

To cover this gap, the government is planning to get borrowing from markets, states and small saving schemes. The proposed interest payment is Rs 809701 crores, which was Rs 612070 crores in 2019-20, he said.

''Under such circumstances the government may feel tight financial pressure which will suppress the economic growth of India and will surely result in decline of GDP of our country,'' he added.

He later said that the decrease in import duty of scrap or steel won’t impact much the prices of steel as the 5 per cent fluctuation hardly matters in the steel industry.

''The international markets have already witnessed a boom in pricing, so the need was to impose the ban on export of steel by Indian manufacturing companies.

The increase of five per cent custom duty on screws won’t much impact the fastener industry of India,'' he concluded.