MSMEs sector Blatantly Neglected: Industry Professionals React

Indranil Deb, Principal, Mobius Strip Capital Advisors, Mumbai, said the budget is ordinary and lacklustre. The lack of time available to conceptualise imaginative and innovative solutions to the myriad problems of a growing economy is evident.

“The budget is particularly negligent towards the MSME sector. There are no announcements for supportive infrastructure or systems that help small and medium entrepreneurs. Neither is there any announcement regarding expansion of credit(unlike agriculture). The budget could have specifically offered tax and other fiscal incentives for MSMEs that are innovate, that create large employment opportunities, help, educate and upgrade the skills of their employees and help the country improve its share of global trade. Unfortunately, the budget is silent on all these issues.

“However, the Government needs to be commended for controlling the fiscal deficit for 2010-11 to 5.1%(below the expected level of 5.5%).

“Playing to the political gallery, the Government has announced a significant increase in budgetary outlays to the education sector and the strengthening of the National Skill Development Council(NSDC). Another such populist step is the announcement of increasing the flow of credit to the agriculture sector from Rs. 3.5 lac cr. to Rs. 4.5 lac cr. Although the move towards supporting ventures related to green technologies is the need of the hour, both from the standpoint of India's role of being a responsible nation in the global community, as well as towards riding such initiatives to promote innovation and entrepreneurship in the country, the government has only played lip service.

“There are several disappointing features. There is no concrete plan to reduce government expenditure. As the problems of leakage and inefficiencies continue unabated, an angry nation will soon begin to question the need for larger than necessary state machinery. There are too many tax items(old and new) in the budget, which harkens back to the eighties. Nothing concrete is mentioned in the budget to tackle inflation and the challenge to efficient food distribution(except for sops for cold storage chains).”

Expressing disappointment for lack of any special provision for the garment sector in budget proposals for 2011-12, Rakesh Vaid, President, Garments Exporters Association, regretted that the Budget has proposed to convert the optional levy into a mandatory levy at a unified rate of 10 per cent for readymade garments and made-ups of textiles which were earlier under an optional excise duty regime, which would adversely affect the garment sector of the textile industry. Although, CENVAT credit of inputs and services would be available the garment factories will now have to register themselves with central excise, increasing the net transaction and administrative costs. It would also lead to unnecessary harassment and delays in handling time bound export shipments, said Vaid.

Although, the Finance Minister has dexterously handled the tedious task of striking a balance between the needs of development and social and political compulsions of the present economic situation, and has taken steps to achieve the objective of boosting economic growth and employment generation, the exporting community feels being left in the lurch without an adequate fiscal relief in the Budget proposals. While giving emphasis on agriculture, social sector, education, skill development, health and infrastructure, the industry and trade, unfortunately, have been neglected.

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