Why MSMEs are the Pillars of Indian Economy?

Since May 2014, the government adopted a two-point program for making MSMEs and startups for the development of India’s engine. MSME works as a pillar for the Indian economic growth and helped the nation to mark its presence worldwide. First, it was to improve the economic indicators of India, to improve the above-down improvement program and improve the ease of doing business, whose benefits usually reach all entrepreneurs and especially MSMEs and startups. Secondly, there was a policy adopted at the grassroots level which was focused on giving special incentives to MSMEs and startups so that they can grow and they can provide employment opportunities for nearly 10 lakh Indians engaged in the labor class every month. There are large number of Banks who offers loan for MSME at best price.

The guiding principle for both types of reforms is that there should be such a detailed arrangement based on the rules, in which honest entrepreneurs can become a global competitor. Up to downstream reforms include the following, which will benefit MSMEs and Startups: Institutional measures for the settlement of GST, loan disbursement and bankruptcy cases; Generally generous in foreign direct investment in all sectors; In the case of stranded casualties, aggressive action, massive investment in infrastructure and government e-mail to facilitate government procurement Structure of freight Place portal so that small companies can also be bidding for government contracts online competitive rates.

Upgrades for lower levels for MSMEs and startups include the following three columns: –

  1. Improve access to capital
  2. Improve access to technology
  3. Transaction that decreases the business cost

Two major improvements have been implemented for MSMEs, on the basis of GST filing, the re-classification of such units on the basis of ‘Plant and machinery/equipment investment’ to ‘annual turnover’, in which the Inspector Raj ended. To reduce the corporate tax rate from 30 % to 25 % in the case of the annual turnover of up to Rs 250 crore; this has benefited more than 60 million MSME units across the country.

MSME Loan and SME Loan Schemes

Government of India has a long-term government procurement policy, under which every Central Ministry / Department / Public Sector Establishment has to purchase minimum 20% of its total annual purchase of goods and services from micro and small enterprises. This policy also includes other benefits, such as free tender sets, price preference, and 358 items reserved for purchase only with MSMEs.

Several measures have been taken to improve the reach of MSME’s capital. The Prime Minister’s Employment Generation Program (PMEGP) is a major credit-related subsidy program for micro-enterprises in the non-agricultural sector, under which 4.49 micro enterprises were assisted by December-2013. Under the Credit Guarantee Program (CGTMSC) for the Micro and Small Enterprises, an inclusive securities-free SME businessloan facility by sources like Indifi provided over 28 lakh entrepreneurs have been benefited. Its fund amount has increased to three times from Rs 2500 crore to 7500 crore rupees.

RBI Played a Major Role

The Reserve Bank of India has played a role in extending the upper limit in the case of asset classification norms for MSMEs and for the purpose of MSMEs, under the priority sector. This ensures that such amount of credit to such units will be considered as priority sector loan for MSMEin Indiaand there will be no upper limits. Not only this, in the budget of this year, the allocation for the financial year 2018-19 has been increased to 3 lakh crore rupees. Under this major program of government, more than 11 crore loans worth Rs 4.5 lakh crore were dansisbursed without any bank guarantee so that 30 million new venture could be set up. Out of total loan accounts, 76 % of women and more than 50 % were affiliated with SC, ST and OBC communities.