Can The Interim Budget Deliver For The SME Sector?

The Budget that Arun Jaitley will deliver on Feb 1, 2019 is most likely to be an interim budget. These budgets as in the past may not have too many policy changes, particularly with regards to major policy changes.

Most of the SME sector in any case looks to the Goods and Services Tax (GST) for changes. However, in the previous Union Budget 2018-19, the government did lay an emphasis on funding. "Mass formalisation of the business of MSMEs is happening after demonetisation and introduction of GST.

This is generating enormous amount of financial information database of MSMEs which will be used for improving the finances of MSMEs and other requirements including working capital," said Jaitley in the Lok Sabha while presenting the government's budget outlay for 2018-19.

Arun Jaitley had then promised as much as Rs 3 lakh crores under Mudra for lending purposes. In the interim budget, one cannot expect too much for the SME sector and at best there maybe some focus on increased lending for the sector.

This is because the sector has been starved of funds in the past. Measures to address the NPA problems will be on ongoing issue that the RBI may have to work along with the sector. Overall, one cannot expect too much of policy changes for the SME sector, as most of the tax related issues now come under the GST. The government in the budget does not tweak the GST rates, given that it remains a prerogative of the GST Council and is done outside the budget.

Hence, at best one may hear about some policies and programmes that the government plans to undertake more than anything else.

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