Union Budget lays vision for USD 5 trillion economy; but lacks thrust on MSMEs

Interim Budget presented by Ms. Nirmala Sitharaman, Hon’ble Minister for Finance, is well intended, well meaning with long term plan to achieve US$ 5 trillion economy by 2025, the Finance Minister could have given  more thrust and incentive to  manufacturing sector and Micro Small and Medium Enterprises, (MSME)  said Mr. Vijay  G. Kalantri, President, All India Association of Industries (AIAI).

Among the progressive measures announced in the budget are attracting foreign firms to set up mega-manufacturing plants, allocating Rs. 70,000 crore for bank recapitalization, addressing NBFC crisis, setting up a panel to realize Rs. 100 trillion infrastructure investment.

“The government has rightly taken steps to set up 100 new clusters, 80 livelihood business incubators, setting up platform to enable early clearing of bills receivables by MSMEs. However, the government must take more steps to ensure that banks, instead of acting as recovery agents, become lenders and encourage entrepreneurship. There is a need to uplift enterprises by rationalizing the tax structure, simplifying laws, rules and regulations, and implementing the government’s vision of ‘Minimum Government, Maximum Governance’. This will also stimulate the government’s ambitious ‘Make in India’ plan. ”

“We laud the government’s initiative to extend pension to about three crore retail traders and small shopkeepers with annual turnover of less than Rs. 1.5 crore,” Mr. Kalantri remarked.

The announcement of various simplification in regard with Goods and Service Tax (GST), Direct Taxes and Custom duties are a welcome feature of the budget but there could have been more to give boost and impetus to growth which is lacking.

Intentions of the Government for Minimum Government better Governance needs to be implemented in letter and spirit added Mr. Kalantri.

Various outlay with regard to infrastructure, education and agriculture including thrust to dedicated freight corridor will go a long way in improving infrastructure and will give boost to our Indian economy.

In its pursuit to attract foreign investment, the government plans to relax FDI norms on aviation, media (animation, AVGC) and insurance sectors. The government has also proposed to ease local sourcing norms for FDI in Single Brand Retail sector.

It is a disappointment that the government has just extended 25% corporate tax rate to firms upto a turnover of Rs. 400 crore, instead of making it applicable to all companies. Also, the government has continued to pursue its earlier policy of not passing on the benefit of fall in global crude oil price to the end consumers. The Union Budget has imposed Special Additional Excise duty and Road and Infrastructure Cess on petrol and diesel each by one rupee a litre.