Union Budget- 2018 has announced sops and innovative measures for the small and medium enterprises. The finance minister Arun Jaitley in his budget speech said Medium, Small and Micro enterprises are a major element of growth.
The finance minister Arun Jaitley has lowered corporate tax to a wider base of medium, small and micro enterprises. The corporate tax rate that was reduced from 30 percent to 25 percent last year will now be extended to companies with annual turnover of Rs 250 crore from this fiscal. It is expected that it will create investible surplus and lead to job creation. The finance minister has pointed out that this move will help entire MSME sector and account for 99 % of the companies filing tax returns.
The budget has also made provision of Rs 3794 crore for credit support, capital and interest subsidy for the sector. The target for lending under the MUDRA Yojana is set at Rs 3.3 lakh crore. MUDRA provides funding to micro and small enterprises whose credit needs are below Rs 10 lakhs.
The government has taken a innovative step by getting Non Banking Finance Companies (NBFCs) to play a larger role in financing small and medium enterprises. NBFCs will be a good platform for financing under MUDRA Refinancing policy. The government will also announce measures to tackle NPA (Non Performing Assets) problem in MSMEs.
The FM has also said that data generated under Goods and Service Tax can be used to enhance credit availability to the sector. The government is proposing changes to online loan sanctioning facility for medium, small and micro enterprises which will result in quick decision making by banks.
The finance ministry has asked public sector banks to open MSME intensive branches. The banks have been advised to open specialized branches with skilled manpower to cater to the requirements of MSME sector. The banks also have been advised to strengthen cluster based lending and as many as 50 clusters have been identified.
The Finance Minister Arun Jaitley said more capital for public sector banks will increase credit flow to micro, small and medium enterprises.