MSMEs to Play Crucial Role in Achieving the Target of 5 Trillion Dollar Economy: Nitin Gadkari

Union Budget 2019 has arrived along with many aspects to cheer for MSMEs.  In a candid conversation, Hon’ble Union Minister, Government of India, Ministry of MSME and Ministry of Transport, Road and Highways, Mr Nitin Gadkari explained his key observations regarding the Union Budget 2019-20 to Faiz Askari of SMEStreet.

Mr. Gadkari emphasized on the role of MSMEs in India’s aggressive target of becoming 5 Trillion Dollar economy in the next few years.

Here are the excerpts:

According to you, how is this year’s Union Budget from MSMEs perspective?

The budget presented at Lok Sabha by Ms. Nirmala Sithraman is a positive and result oriented budget that aims high growth for India in the near future. For MSMEs, this budget will add more thrust for potential rich MSMEs who are committed to working along in achieving the goal of becoming 5 Trillion Dollar economy in a few years from now. In terms of numbers, the total budget allocation for FY 2019-20 is kept at Rs. 7011.29 Crore. This is an all-time highest allocation for the MSME Ministry. As compared to last year’s budget allocation of 6552 Cr. An additional Rs 459 Cr are added to the budget. And if we compare this to the previous year’s allocation for MSME ministry, it is 7% increase.

More interestingly, while ensuring MSMEs interest in the budget, during last four years, the allocation for MSME has gone up by 133% from Rs. 3007.42 Crore in the Financial Year 2015-16 to Rs. 7011.29 Crore in Financial Year 2019-20.

All these fact points highlight our vision of economic growth and the importance of MSMEs.

Today, when India is targeting to become 5 trillion dollar economy, what contribution, according to you should be coming from the MSME sector?

MSMEs are an extremely important component of the economy. According to the recently published economic survey 2019, MSMEs not just create profits for their promoters but they contribute significantly in job creation and productivity in the economy. Our government’s policies, therefore, are focused and committed to enabling a positive ecosystem for MSMEs to grow.

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MSME Minister Nitin Gadkari explaining his observations on Union Budget 2019 to Faiz Askari of SMEStreet

Today, the contribution of MSMEs in country’s GDP is somewhere around 29%, this figure will change to 50% in near future and with that aspect Indian economy will grow to the size of 5 Trillion dollars. This is an aggressive target, only an aggressive target can bring real economic transformation.

What are your views on the role of MSMEs in the Prime Minister’s vision for Job creation?

MSMEs are going to play a very important role in job creation. This year’s union budget has shown a great amount of commitment to facilitating MSMEs to become job creators. The flagship scheme for employment generation of MSME Ministry- Prime Minister Employment Generation Programme (PMEGP) got an all-time high allocation of Rs.2327 crore. The allocation in the scheme has gone up by 117% over the period of last two years. This would generate self-employment opportunities through establishment of about 88,000 micro enterprises in the non-farm sector, providing employment to around 7 lakh people. This would facilitate a credit flow of around Rs.10,000 crore to the micro sector.

However, the Finance Minister herself mentioned very clearly in her budget speech that entrepreneurs of India are getting considered as wealth creators for the nation.

As of now, Over 11 Crore Indians are employed with MSMEs. With an added thrust we aim to add another 5 Crore jobs to this large pool. In the coming five years we expect this target will be achieved and by then we will have15 Crore Indians working with MSMEs.”

Budget 2019 Highlights for MSMEs

In addition, Mr Nitin Gadkari also emphasized the following points that The Union Budget 2019-20 carries to attract the MSME sector:

Interest Subvention Scheme for Incremental credit to MSMEs–As part of access to credit, Hon’ble PM announced a 2% interest subvention for all GST & Udyog Aadhar Memorandum registered MSMEs maximum up to Rs.1 crore, on fresh or incremental loans. The allocation was 975 cr for 2018-19 and 2019-20.

For Promoting Khadi Rs.871 crore has been allocated for the Khadi & Village Industries sector in order to bring in higher growth, better remuneration for the artisans and creating value in the supply chain.

Technology Centres – This year’s budget has proposed to establish 20 Extension Centres during 2019-20. These Extension centres would extend support in the field of skilling and technical consultancy to MSMEs.

Government has adopted ‘Cluster Development Approach’ as a key strategy for enhancing the productivity, competitiveness and capacity building of Micro and Small Enterprises (MSEs). The total number of Technology Centres under the Ministry will go up from the existing 18 to 153 in the next few years.

The total allocation under the Credit Linked Capital Subsidy Scheme for Technology Upgradation is Rs. 737.44 Crore. The major objective of this Scheme is to facilitate MSEs by providing an upfront capital subsidy of 15 per cent (on institutional finance of upto Rs 1 crore availed by them) to upgrade their plant & machinery with state-of-the-art technology.

A special focus has been given to ‘Solar Charkha Mission’ to touch the lives of Rural Artisans including Spinners, Weavers, Stitchers, by focusing on Solar Charkha based Clusters. The scheme envisages setting up production clusters, each employing around 2000 youth in the rural area, at least 50% of which would be women.

Read Full SMEStreet Coverage on Union Budget 2019-20