‘Smart recovery’ for MSMEs with GST payments crossing pre-Covid levels, Udyam registrations over 1-cr mark: Economic Survey
Jan 31, 2023
Observing how the government has taken multiple steps to cushion the economic impact of the pandemic on MSMEs, the Survey said that the AtmaNirbhar Bharat package has extended adequate support to their ilk.
Taking cognisance of the way Micro, Small and Medium Enterprises (MSMEs) have posted smart recovery from the pandemic, the Economic Survey 2022-23 said that GST trends reflected this in good measure. “The recovery of the MSME sector from the pandemic-induced shock is evident in the trend in GST paid by MSME units. The GST paid by the sector in FY22 has crossed the pre-pandemic level in FY20,” the Survey tabled on Tuesday noted.
Explaining how the pandemic affected the sector’s performance, the Survey highlighted that while the contribution of the MSME sector to overall GVA rose from 29.3 per cent in FY18 to 30.5 per cent in FY20, the economic impact of the pandemic caused the sector’s share to fall to 26.8 per cent in FY21. MSME contribution to the manufacturing sector’s GVA also marginally fell to 36.0 per cent in FY21.
Nevertheless, resilience was exhibited by the sector despite a tough economic environment. Observing how the government has taken multiple steps to cushion the economic impact of the pandemic on MSMEs, the Survey said that the AtmaNirbhar Bharat package has extended adequate support to their ilk. “Some of the measures undertaken include the modification of the definition of MSMEs; the provision of Rs 20,000 crore subordinate debt for stressed MSMEs, Rs 50,000 crore equity infusion through Self Reliant India fund; the waiving of the global tender requirement for procurement of up to Rs 200 crore; launching of the Udyam portal for MSME registration, a paperless, zero-cost registration portal that is based on self-declaration and only requires Aadhaar,” it stated.
Registrations on the Udyam portal, it said, crossed the one crore mark in August 2022, surpassing the total registration done in the past 14 years under the old regime in just 2.5 years. “As of 7th January 2022, the portal has a total registration count of 1.32 crore, of which 1.27 crore have been classified as micro-enterprises. Enterprises registered on the portal employ 9.6 crore people, of which 2.3 crore are women. There are 1.5 lakh exporting units, which have contributed a cumulative Rs 9.7 lakh crore worth of exports,” it added.
On the aspect of easing financial woes of the sector, the Survey alluded to the Samadhaan Portal, set up under the Micro, Small and Medium Enterprises Development (MSMED) Act to monitor the outstanding dues to the MSME sector. “As of 7th January 2022, the portal has received a total of 1.3 lakh applications, of which 16.8 per cent have been disposed while 25.0 per cent are currently under consideration, and 25.1 per cent have been rejected,” it said.
In order to fast-track this process, the Survey noted, the government has instructed Central Public Sector Enterprises (CPSEs) and all companies with a turnover of Rs 200 crore or more to get themselves onboarded on the Trade Receivables Discounting System (TReDS) platform for facilitating the discounting of trade receivables of MSMEs through multiple financiers.
Elaborating further on the measures taken, the Survey said that CHAMPIONS, the single-window grievance redressal portal for MSMEs launched by the Ministry of MSME in June 2020, has received 56,825 grievances as of 16th January 2023, of which responses has been given to 55,878 grievances. “The portal continues to be improved through initiatives such as the localisation of the portal in 11 regional languages and the introduction of a Chatbot,” it added.
Talking about how access of MSMEs to market and credit has improved, the Survey highlighted that the government has initiated the ‘Raising and Accelerating MSME Performance’ scheme (RAMP) in FY23. “The World Bank-supported scheme aims at strengthening institutions and governance at the Centre and State, improving Centre-State linkages and partnerships and improving access of MSMEs to market and credit, technology upgradation and addressing issues of delayed payments and greening of MSMEs. The RAMP programme will be implemented over a period of five years,” it said.
The total outlay for the scheme is Rs 6,062.4 crore, out of which Rs 3750 crore would be a loan from the World Bank, and the Government of India would fund the remaining Rs 2312.4 crore, as per the survey document.
Quoting data from the National Credit Guarantee Trustee Corporation (NCGTC), the Survey said that as of 30th November 2022, 1.2 crore MSME units availed the ECLGS scheme and raised collateral free resources to the tune of Rs 3.6 lakh crore. “A recent CIBIL report showed that 83 per cent of the borrowers who availed of the ECLGS were micro-enterprises, and more than half of these borrowers had an exposure of less than Rs 10 lakh. The NPA rate in banks for the category of MSME borrowers who availed of ECLGS was lower than the category that did not avail of the scheme,” it said.
The Emergency Credit Line Guarantee Scheme was announced in FY21 to support small businesses, which were facing financial difficulties because of Covid and other economic disruptions. These companies do not have deep pockets and were facing financial distress.
[The Economic Times]