Budget Boost for MSME
MSME was one of the sectors that faced the worst impact of GST. To compensate the fall, the government incorporated various measures in its recent budget (2018-19). A few of these measures were: tax concession
The lowering of corporate tax from 30 per cent to 25 percent for companies having a turnover up to Rs 250 crore. The government has changed the criteria of classifying MSMES from investment in plants and machinery to the company turnover, they will directly benefit from the lowered corporate tax. The turnover criteria classifies companies having a turnover of up to 5 crore as micro, 5-75 crore as small, and 75-250 as a medium enterprise.
Apart from budget relief, the Reserve Bank of India (RBI) announced additional 180 days for MSMES to clear their dues against loans. The government is also targeting recapitalisation of the banks to enable their lending capacity by Rs 5 lakh crore, of which a substantial chunk would be used by MSMES, as expected by the government.
The RBI has also removed the priority sector cap for MSME loans, which is expected to direct additional resources to this sector. Meanwhile, the banks have been allowed to treat all MSME loans as priority sector loans without any limit on their exposure.
Recently in February 2018, the Finance Minister Arun Jaitley launched the Crisidex, the first sentimental index for MSMES. Crisidex has been jointly developed by rating agency, CRISIL and Small Industries Development Bank of India (SIDBI), and is a composite index to measure MSME business sentiments on a scale of zero (extremely negative) to 200 (extremely positive).