Budget 2023: The Micro, Small and Medium Enterprises (MSME) sector contributes 33% of India’s GDP and creates 120 million jobs across all industries, making it an important sector in the country’s economy. However, the MSME sector is dealing with several issues, and the upcoming Union Budget 2023 provides an opportunity to address these issues and boost job growth.
The Union Budget 2023 presents an opportunity to target employment generation in the MSME sector by addressing the challenges faced by MSMEs in terms of funding, infrastructure and formalisation.
The credit gap of Rs 20 lakh crore is one of the biggest problems of MSMEs. To meet their credit needs, many micro-entrepreneurs are forced to turn to informal sources such as family, friends and local moneylenders, resulting in higher interest rates and increased liabilities. By increasing the amount specified for MSMEs in priority sector lending and introducing a credit guarantee program for MSMEs, the Union Budget 2023 may address this issue. MSMEs will have easy access to financing, which will lead to business expansion and job creation.
Due to lack of infrastructure, MSMEs have high operating costs and are less competitive. By increasing funding for infrastructure development, especially in rural areas, the Union Budget 2023 may focus on job creation in the MSME sector. The budget may also give tax exemption to MSMEs who set up their business in rural areas and provide financial assistance to purchase machinery and equipment.
A major chunk of MSMEs are not registered in the unorganized sector. Because they are not formalized, they have less access to timely and affordable credit, a smaller talent pool, and weaker bargaining power with suppliers and dealers. Union Budget 2023 may address this issue by giving tax incentives to MSMEs for registration of MSMEs and setting up a single-window clearance system for MSMEs.
questions to ask
1. What is the Union Budget of India?
The Union Budget of India is an annual financial statement presented by the Government of India, outlining the projected revenue and expenditure for the upcoming financial year.
2. How can the Union Budget 2023 target job creation in the MSME sector?
The Union Budget 2023 may target job creation in the MSME sector by addressing the challenges faced by MSMEs in financing, infrastructure and formalization.