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Budget 2020: Accelerating Growth for Startups and MSMEs


On 1st February 2020, Nirmala Sitharaman gave the longest ( 2 hours and 41 minutes) speech that has been delivered by a finance minister ever, making her the second woman who has presented the budget for the second time after Indira Gandhi. This year’s budget was based on the central ideas of – “Aspirational India, Economic development, A Caring Society.” In the budget of 2020, 70 exemptions from personal income tax have been removed. Indian railway has got a budgetary allocation of ₹70,000 crores and ₹273 billion will be utilized for the promotion of industry and commerce. ₹69,000 crores have been allocated for the healthcare sector, out of which, ₹6,400 crores will be used for Ayushman Bharat Yojna. The government will provide ₹99,300 crores for the growth of the education sector. In addition to all this, the most important budget highlight has been for the micro, small and medium enterprises (MSMEs) that contribute 29 percent to the nation’s GDP & 49 percent of its export. Other than that, it will also be advantageous for potential entrepreneurs.

In this budget speech, it is has been announced that the government will allocate MSMEs ₹ 7,572.20 crore for their growth. This budget has also announced various other initiatives for them, including:

  • Increasing the turnover threshold for the audit of accounts from ₹1 crore to ₹5 crores as well as a scheme to provide subordinate debts to MSMEs
  • Under the Prime Minister Employment Generation Programme, ₹ 2,500 crores have been allocated in order to create self-employment opportunities by establishing various micro-enterprises in the non-agriculture sector. This will be helpful for unemployed youth and artisans in both rural and urban regions
  • An amount of ₹ 900 crores will be allocated to the SMEs for the funding of the debt of industries
  • Indian banks have been asked to extend the restructuring of MSME NPAs for just one year which had a deadline of March 2020
  • RBI has been asked by the Indian government to extend the debt restructuring window for all Micro, Small and Medium Enterprises by March 31, 2021
  • To support the growth of mid-sized companies in sectors like pharmaceuticals, auto components, etc. through a scheme of ₹ 1,000 crore
  • Under the Credit Linked Capital Subsidy and Technology Upgradation Scheme (CLCS-TUS), ₹ 805 crores have been allocated to enhance the competitiveness of MSMEs with the help by innovation and technology
  • Fund for MSE-Cluster Development Programme, which is aimed at improving & strengthening productivity and competitiveness of micro and small enterprises (MSEs), has been increased from ₹ 228 crores to ₹ 391 crores, during this year
  • Essential amendments will be made to the Factor Regulation Act 2011 which will enable NBFCs ( non-banking financial companies ), to extend invoice financing to MSMEs with the help of TreDS. This will be done to enhance the financial and economic stability
  • For the dual purposes of development of Khadi-based business enterprises and Indian rural economy, ₹ 472 crores will be provided to Gramodyog Vikas Yojana and Khadi Vikas Yojana
  • To make traditional industries ( that come under ‘Scheme of Fund for Regeneration of Traditional Industries’ (SFURTI)), more productive, profitable, and capable enough to generate a high level of employment for artisans, fund of ₹ 465 crores will be provided to them, that was ₹ 125 crore in the previous year
  • ₹ 150 crores have been given to the National Scheduled Caste/Scheduled Tribe Hub in order to provide a training program to those entrepreneurs that are in SC or ST category

Budget 2020 shows that the government has shifted its focus towards the growth of small and medium scale industries in India which is going to help them in a massive way and will also increase the ease of doing business in India.

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