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Budget 2021, Huge Expectation After The Tumultuous Year 2020

Bluei-Akhilesh-Chopra
Truke-S2
Mr. Akhilesh Chopra Sales Director at Bluei

We have many expectations from the upcoming Budget 2021, after the tumultuous year 2020. India now lives in the third spot worldwide when it comes to Startup and MSME’s generated economy, the government must think about introducing more tax benefits for startups and MSME’s. This is of even greater effect now that businesses are trying to come out of the Covid-19 caused eclipse and work towards economic recovery. Also, as we expect the investment situation to gradually bounce back to the pre-Covid phase, a systematic yet simpler process for raising funds would help attract more foreign investment. This will also have a positive impact on the slow job market and improve the current employment situation.

E-commerce- E-commerce is the backbone of Indian economy for many years and even through the pandemic, its frequent growth should be one of the areas of focus in the new budget. Among other measures, the government should consider reducing GST rates to boost the purchasing power of consumers. This step will not only ensure that e-commerce continues being a positive quadrant but will also help businesses in other sectors significantly curtail expenses and maintain healthier cash flows, which is vital right now.

Interest Rates- Small and Medium category Industries must be charged subsidised interest rates of 6%, and 7% on loan respectively as they are the major job creators, while their requirement is very limited 10, 20, and 75% of the total funding under this category. Their volume in percentage is 90, 7, and 3% in the respective category.

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Raw Material- Another major issue faced by industries under the MSME sector is the steep rise in Raw Material prices which are as high as to the tune of 50 to 60% in the last three months. This issue has brought many of the Industries to the brink of closure. MSMEs should smooth the progress through Central or State Industrial Development Corporations to obtain Raw Materials on preferential pricing basis.

Easy in the loan application- There are few hurdles in the current process for a loan application for MSMEs that can easily be addressed by the government. There are many documents that are requested while applying for a loan to prove the credibility of the lender. Most MSME loans are provided without any security, which makes such loans insecure and uneven for banks. While it is beneficial for the lenders as they do not have to bear any losses, it increases the chance of bad money for the banks. Since the security is not required, it leads to confirmation of the credit score of the candidate by the banks and other lenders. In case an individual doesn’t have a good credit score, they cannot apply for the loans at all. Even if the loan is authorized, the whole amount is not always given and generally, only 50-60% is sanctioned.

Manufacturing- Indian manufacturing needs to become more competitive. For this, the industry and the government must work together. If manufacturing grows faster, the economy will also grow accordingly. The main driver for employment, even in the services sector, is manufacturing, due to the vast aftermarket. The industry is picking up, but there is not much difference compared to, years 2017.  Also, the pandemic has provided the center an opportunity to attract global manufacturers and make the country a manufacturing hub emerging as an alternative to China.

While ‘Made in India’ devices are not rare anymore, expect these devices to be more Indian than before as companies try to cut the cord with China when it comes to what goes inside these gadgets. India has the potential to put the foundation of a homegrown smart gadgets ecosystem this year, looking well away from the software part. The country is already rising as a smart gadgets manufacturing hub because of the large domestic market.

Atmanirbhar Bharat- The upcoming budget should keep the Atmanirbhar Bharat sentiments in mind while continuing to expand programs and fund allocations in this direction. This comprises further support to local production and supply chains by partnering with local MSME organizations in order to meet demands.

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