Budget takes holistic approach to support MSMEs, startups, agri and other sectors

Comment by Dr. Vijay Kalantri, President, All India Association of Industries (AIAI) and Chairman, WTC Mumbai on Union Budget 2024-25

“I congratulate Hon’ble Finance Minister for presenting the budget for the 7th consecutive term, a rare distinction for India’s finance ministers. I welcome the budget for taking holistic approach to support MSMEs, start-ups, infrastructure, agriculture, skill development, e-commerce and tourism.

The need of the hour is capacity building in manufacturing by promoting investment through effective policy.

The government has taken steps to promote collateral-free MSME credit, relax fresh credit norms for SMA classified loan account of MSMEs and announced more SIDBI branches in MSME clusters.

I hope these initiatives, along with skilling of 4 crore youth and thrust on infrastructure and digitisation of agriculture, will support India’s economic growth.

The Hon’ble Finance Minister has articulated the roadmap to attain USD 40 trillion economy vision during the Amrit Kaal.

Specifically, I welcome the government’s move to decriminalise minor TDS offences, abolition of angel tax for all classes of investors and increasing standard deduction for salaried classes.

I commend the Hon’ble Finance Minister for balancing the twin objectives of promoting consumption, investment, while also reducing fiscal deficit to 4.9% from 5.1% estimated in the interim budget.

I look forward to effective implementation of the budget announcements at the ground level.

At the same time, the budget lacks major policy measures to support capacity building, manufacturing investment, infrastructure and could have given incentives for MSMEs to increase production capacity, invest in R&D. The government could have reduced personal income tax rates to provide relief to working class and boost consumption. Also, currently there are multiple GST slabs, which needs to be reduced to two to promote ease of doing business, reduce ambiguity and litigation.

In future, I expect the government to rationalise the GST regime by slashing rates on essential items such as cement, bringing fuel, power and real estate under GST and other measures.

The government could have also announced measures to further improve ease of doing business for MSMEs and start-ups. Today, startup founders prefer to register their companies abroad instead of in India because of complex local regulations for registration, fund raising, unfavourable tax treatment while exiting investment, restrictive FEMA guidelines for doing business with foreign clients and so on.

The government could have also announced the setting up of an official trade promotion organisation with branches in foreign countries to promote India’s exports and attract investment.