By Akshay Hegde,
With an unprecedented pandemic-induced recession, 2020 has severely challenged MSMEs to sustain and survive. The survey conducted by the NBFC Magma Fincorp showed that an estimated 50% of MSMEs have witnessed around 20-50% contraction in their business earnings due to the Covid-19 pandemic, and this has had a ripple effect on unemployment and demand.
With a post pandemic budget just around the corner, more focus should be emphasized on the Make in India initiative and big credibility should also be given to locals to set the economy right on a growth trajectory.
The government should strive to increase the disposable income of the middle classes so that discretionary spending will rise. Concrete steps should be taken to improve the cash flows and reduce the working capital burden on start-ups and SMEs. Many offline businesses moved to online during 2020 because of the pandemic and are looking to take advantage of the power of digital.
However, the current compliance and taxation laws for setting up an e-commerce entity are too stringent especially for startups with limited resources. In line with the ease of doing business initiative, we expect Budget 2021 to bring about significant compliance and taxation reforms for such e-commerce players.
Budget 2021 should focus on enabling the development of MSMEs by providing them access to easy credit, reducing income tax rate & GST tax rate, and offering rebates to MSMEs willing to adopt new technologies.
This will help in creating more employment opportunities. In the union budget 2021, it is for the government to ensure that the right push is given to build a strong tech ecosystem with favorable tax policies and upskilling or reskilling the workforce in the segment to pave the way towards economic growth.
(The author is co-founder & Managing Director, ShakeDeal)