Union Budget 2021 Reactions from Industry: MSMEs' Perspctive

Just after the Union Budget 2021 is tabled in the parliament by Finance Minister Nirmala Sitharaman, SMEStreet started the activity of getting feedback from the industry from the perspective of MSMEs.

Shachindra Nath, Executive Chairman & Managing Director, U GRO Capital expressed his views on the Union Budget 2021 as:

"Broadly evaluating, the Union Budget 2021 is a significant attempt by the government, to accept a higher fiscal deficit and enhance expenditure towards economic revival. It is appreciative of the government to put a special emphasis towards providing relief to the tax payers and reducing the burden posed by COVID-19. One of the key highlights of the budget is setting-up of the development finance institution (DFI) towards infrastructure financing and institutional framework to purchase corporate bond, which would solve the issue of liquidity for the infrastructure sector and corporate bond market. Also, with the path-breaking initiative of instituting Asset Reconstruction Company (ARC) and asset management company (AMC) for NPA consolidation, banks have been allowed to streamline their focus on the much needed growth."

On the MSME's Perspective

"The government has reduced the threshold for NBFCs to initiate recovery under the SARFAESI Act, 2002. This is an effective step towards ushering credit discipline and in the long-term will increase the penetration of credit to small businesses. The government has also doubled its allocation towards MSMEs, which would greatly support their revival and the eventual growth. Holistically, the Union Budget 2021 is an encouraging event, yet we optimistically look forward to a distinctive support for NBFCs, with a framework to provide them sufficient liquidity, while also furthering the credit guarantee scheme support to the MSMEs," says Shachindra Nath of U Gro Capital.

Pankaj Sharma, CEO of Religare Finvest Limited pointed out the allocation of Funds for MSMEs as a great booster for this sector and he said:

“The Government has announced a number of measures for MSMEs besides more than doubling the allocation for the sector. Several other steps like reduction of customs duty on semis, flat and long products of non-alloy, alloy, and stainless steels is a big boost for the sector that has borne the maximum brunt of the COVID 19 pandemic. MSMEs and other user industries had been severely hit by a recent sharp rise in iron and steel prices. Further measures for metal re-cyclers will also provide the necessary relief to the many MSMEs working in those sectors.

However, we feel that the government should have considered addressing the long pending demand of the MSME sector to simplify GST and reduce the tax rate from 18% to 5% on professional services.”

Mr Anirban Mukherjee, CEO, PayU India welcomed the Union Budget 2021 by saying:

"PayU is proud to have led the digital payments space in India and welcomes the forward-looking budget promoting this space. We believe that INR 1,500 crore fund will enhance the penetration of digital payments, encourage greater acceptance, enable merchants to grow and boost the digital payment space. The FM has addressed critical sectors and the measures are likely to boost the economy."

Mr. Rajeev Radhakrishnan - CIO - Fixed Income, SBI Mutual Fund shared his overview on Union Budget 2021 by commenting,

Mr. Rajesh Uttamchandani, Director, Syska Group said:

“Finance Minister Nirmala Sitharaman stated that for a 5-trillion-dollar economy, our manufacturing sector has to grow in double digits on a sustained basis. We welcome the measures exercised by the honorable Prime Minister Shri Modi Ji and his government in the Union Budget towards boosting electronic manufacturing in the country. The government led by Modi Ji has pledged an infusion of Rs 1.97 lakh crore on various PLI schemes over the next 5 years, starting this fiscal. This is in addition to the Rs 40,951 crore towards the PLI scheme to help expand and boost exports. Today, India’s manufacturing industry has tremendous potential to place the country on the global manufacturing map, simultaneously boosting several employment opportunities to India’s youth. Our manufacturing companies need to become an integral part of global supply chains. With a budget of Rs 15,700 crore, which is more than two times that of the previous year, this will help strengthen the MSME sector in terms of productivity development, technology adoption, strengthening of infrastructure and more. As a company, Syska has always been aligned with the vision of Atmanirbhar Bharat promoting sustainability through our products and creating new job opportunities. The budget has a positive, expansionary approach towards the manufacturing sector, which is reflected through the incentives and strengthening of the PLI schemes provided by the government."

Mr. Kishan Jain, Director at Goldmedal Electricals commented:

“The Union Budget 2021 has provided massive opportunities for companies looking to set up manufacturing facilities in the country. Given our current economic situation across the globe caused by the pandemic, the Finance Minister’s decision to infuse INR 1.97 lakh crore towards various PLI scheme is laudable in addition to the Rs 40,951 crore towards the PLI scheme to help expand and boost exports. As correctly stated by FM Nirmala Sitharaman, our manufacturing companies need to become an integral part of global supply chain. Further, the provision of INR15,700 cr towards the MSME sector, will provide a further fillip to the Government’s flagship Make in India initiative. As a company, Goldmedal Electricals has always been at the forefront of introducing innovative and sustainable solutions that make our planet not only smarter but also sustainable for generations to come and support government’s vision of Atmanirbhar Bharat.”

Ms. Surabhi Goel, CEO - Aditya Birla World Academy, Aditya Birla Education Academy, The Aditya Birla Integrated School said:

“The measures announced by the finance minister in today’s union budget 2021 focuses on two important aspects – one is the continuous upskilling of India’s youth and also providing education for all. We are in-line with the announcement as Aditya Birla Education Academy is at the forefront of creating various programs that help the educators of the country upskill themselves. Finance minister Niramala Sitharaman has set aside funds worth 3000 crore with an aim to create an opportunity for millenials of India to upskill themselves. The budget also provided an impetus on establishing a National Research Foundation by allocating Rs 50,000 crore thereby qualitatively strengthening the education system through the National Education Policy. At Aditya Birla World Academy and The Aditya Birla Integrated School, the focus has always been on creating a cohesive learning environment for the students even through the online medium over the course of last year. We aim to make the students future ready by imparting practical learning along with theory based sessions. We believe that the measures announced by the government will further boost in augmenting the education sector of the country.”

Krishan Agarwal, Finance Controller, 75F APAC commented

 "The heightened expectations from the Budget 2021 has been met with a matching delivery by the honorable FM. This is a Liberal and growth oriented budget, with no adverse tax rollouts. The budget has been well received by the Market participants as is also being demonstrated with the immediate positive response from the stock markets.  However, There is a need for both short-term and long-term enablers for growth for businesses, as well as for the economy as a whole. India is a growing economy and our per capita energy consumption is expected to continue to rise at a rapid rate. Our 2020 oil import bill alone was about $ 100 billion, which is more than 4% of the annual GDP or seemingly almost equal to the annual fiscal deficit! While the Government continues to focus on promoting renewable sources of energy on the supply side, we still have a tremendous untapped opportunity for wide scale adoption of technology driven energy efficiency interventions, which can play an important role in managing the demand side.  Reduction of energy consumption can directly contribute to the fiscal deficit targets in a meaningful way, while at the same time contributing to the long term social and environmental goals. We would like to see some more announcements in the future like incentives, promotions and awareness programs for the Corporate sector promoting direct adoption of energy efficiency investments, which may help unlock the Nation’s energy efficiency potentials."

Mr. Sunny Nandwani - Founder and Managing Partner of Acuver Consulting Commented

"This year's union budget announced an increase in the MSME budget of Rs 15,700 crore, double the previous year's allocation, which will initiate technological interventions in the start-up and MSME space. We welcome this budget as a progressive step to promote entrepreneurship and encourage startups in India.

The budget also emphasized on innovation and research development. Besides, a host of substantial announcements were made on the divestment front, including the introduction of IPO of Life Insurance Corporation in 2022. The Government’s support to the Start-up Ecosystem in India continues even this year as the FM proposed One-Person Company without any restriction on paid up limits, which will benefit the start-ups and innovators.
The Minister of Finance also reiterated the Government's focus to further simplify the GST structure. We are hopeful that this will remove the anomalies and smoothen the process for businesses."