Last fiscal year budget's impact on Indian SMEs

After being selected with a huge majority the Narendra Modi-led NDA government brought hope for many of the citizens of India. The promise of “Achhe Din” as the main slogan behind the advertisement campaign has brought confidence amongst the public. With its two years completed and the third year, starting let’s take a look at last fiscal year i.e., 2015-16 union budget and its impact on SMEs.

Happy SME owners 

If we take a look at 2015-16 Union budget with all its details then we can find that the budget had given a stimulus to the industries as well as SMEs of India. The industry was happy and satisfied with the budget, as they considered it to be supportive and progressive one. As we know that the Central Government has started an initiative known as “Make in India” that mainly emphasizes on the national as well as international companies to produce their products within India. This was a way to encourage the industrial development of our industrial sectors as well as a big boost for our SMEs (Small and Medium Enterprise). Not only the industrial production and development will be enhanced but it will also expand the employment status and opportunity of the countrymen. As per December 2015, the government has received approx. Rs.110 lakh crores worth proposals from different companies ranging from mobile companies to car manufacturers. Also, Japan has established a “Make in India” fund worth of Rs.83,000 crore that will help strengthen the relations between Japan and India. The government has received a proposal of Rs.90, 000 crore till August 2015, for manufacturing of electronics items especially mobile phones.

MUDRA’s impact on small and medium businesses

As SMEs face the main problem of liquidity crunch, the government had continued its effort to motivate and give support to SME sector. The Indian government had allocated Rs. 20,000 crore through MUDRA (Micro Units Development Refinance Agency) Bank. This micro-financing will play a crucial role in developing SMEs. Although MUDRA was launched under SIDBI with an idea to arrange microfinance, currently there seems to be a meagre impact of it as the amount lands in the banks is very less in comparison to what SMEs require. As per data from October 2015, the average disbursement amount by SBI under MUDRA is mere Rs.6511, while through Public Sector Commercial banks the average amount disbursed was Rs.12, 681.

Within just one year and with the help of the finance ministry in the form of fund allocations and exemptions from certain taxes and modifications in policy, we can say that last fiscal year budget has made some drastic development in some fields within a span of small time. With schemes like Pradhan Mantri MUDRA Yojana, SETU and Atal innovation Mission in its kitty, this government has provided some basic support to the SMEs and industry to prosper. But yet there is a long way to go for this government to fulfil their promises.