Hope to see a higher budget allocation to help SMEs battle liquidity crunch, says Instamojo CEO Sampad Swain

By Sampad Swain

Employing more than 40% of India’s workforce, the MSME sector of India is one of the primary pillars of the Indian economy, contributing to nearly 30% of the country’s GDP. With around 63.38 million MSMEs in India, the growth of this sector will play a great role in helping the Indian economy achieve the $5-trillion mark. However, the sector still faces developmental challenges especially in terms of cash flow, access to credit and delayed payments. In the upcoming Union Budget 2020, we hope to see a higher budget allocation to help small and medium sized businesses battle liquidity crunch and measures towards the MSME schemes introduced in the last financial year. Keeping in mind the size of businesses in this sector, liquidity crunch is a major impediment especially in times of distress. The allocation of the recommended distressed asset fund of Rs 5,000 crore along with the activation of the proposed “Fund of Funds” of Rs.10,000 crore to encourage PE and VC firms looking at investing in the MSME segment, will bring respite to both the MSME segment and its key stakeholders.

Additionally, managing and controlling delayed payments is posing a threat to the expansion of the sector. Though the government has established MSME Samadhaan to report cases of delayed payments, having a payment act in place would help regulate timely payments to MSMEs by the government and other large companies. Apart from this, it would be encouraging if the government would introduce policies/allocate funds towards the growth of micro-enterprises that are unable to graduate into small size businesses. The other expectations of the MSME sectors from the Union budget 2020 would include increased employment opportunities, easier GST compliance and allocation of Public Sector Undertakings (PSUs) for the MSMEs in Jammu and Kashmir.

(The writer is the CEO & Co-founder of Instamojo)