Be it Make in India or Skill India, all efforts to a sustainable economic growth and development are not possible if there is no strong small and medium enterprises (SME) sector in the economy. SME contributes approximately 45% of industrial output and 40% of exports. That makes an important contributor to the growth of Indian economy. No wonder, SME sector has high hopes from Union Budget 2017.

Finance Minister offered to double the qualifying turnover limit to Rs 2 crore under presumptive taxation scheme under section 44AD of the Income Tax Act last year. Finance minister also reduced the rate of tax to 29% from extant 30% for the firms with a turnover of less than Rs 5 crore. Post demonetization and expected implementation of GST this limit need to be further hiked. It will not only attract new investments but also bring in more compliance in the sector. Lower taxes will ensure that SME can get to keep more money out of the profits earned and they can invest more and expand faster.

Launch of MUDRA is a step in the right direction. However, the government has to ensure that the banks and other lending partners pass on the benefits of lower rates to the small and medium businesses. Recently prime Minister announced doubling of credit guarantee for SME sector to Rs 2 crore.

The Finance Minister should put in place the right framework to ensure that such enhanced benefits reach the right beneficiaries at least cost. Ease of doing business should be one area where the government must take strong efforts and SME should benefit in that process. Single window system for approvals to set up SME and single window system for funds should be put in place for SME

Source: Money Control