Union Budget 2024 Expectations: Representatives of the MSME industry made many recommendations to finance minister Nirmala Sitharaman to provide a fillip to the sector. Their issues included constraints faced by the industry in obtaining institutional financing, the RBI’s norms related to NPA classification, and the 45-day payment rule.
Recommendations of the Federation of Indian Micro and Small & Medium Enterprises (FISME) centred on 10 points, including a mechanism for NPA classification, a disaster support mechanism for MSMEs engaged in international trade, and operationalising the use of insurance surety instead of bank guarantees.
General Secretary of Laghu Udyog Bharati Om Prakash Gupta said his association gave eight suggestions to Sitharaman for capacity building in the MSME sector.
Regarding the 45-day payment rule under Section 43 b(h) of the Income Tax Act, Gupta said, “We have always advocated for that” as small players suffer because of delayed payments.
Former vice-president of Bihar Industries Association Sanjay Goenka, who was also present in the meeting, said the discussion also focused on incentives for the MSMEs sector.
Subodh Jindal, President of All India Food Processors’ Association, said a suggestion was made that the depreciation rate in the Income Tax Act for plant and equipment be increased to 25 per cent from the existing 15 per cent.
Murali Krishna, president, Federation of Andhra Pradesh Small and Medium Industries Association, said they sought to exempt MSMEs from tax on certain projects like the Polavaram project and the Amaravati Capital projects.
Higher Investment In Agricultural Research
Farm organisations and experts pitched for higher investment in agricultural research, rationalisation of fertiliser subsidies and infrastructure development to boost the sector’s resilience against climate change.
Stakeholders advocated for a significant hike in the budget allocation for the Indian Council of Agricultural Research (ICAR) from Rs 9,500 crore to Rs 20,000 crore.
Indian Chamber of Food and Agriculture (ICFA) Chairman MJ Khan emphasised the need for “massive investment in agriculture R&D” to drive sector growth and increase farmers’ income.
Experts also called for consolidating all agriculture-related subsidies for transfer through Direct Benefit Transfer (DBT) and increasing the retail price of urea, which has remained unchanged since 2018. The promotion of bio-fertilisers and foliar fertilisers through subsidies was another key demand.
Bharat Krishak Samaj Chairman Ajay Vir Jakhar suggested segregating agriculture funds between education and research.
He pointed out that despite the economic returns on agricultural research being ten times higher than other investments, budget increases in the past two decades have lagged behind inflation rates.
Other notable suggestions included disbanding the MSP committee, and commissioning a new agricultural policy for India and changing the funding ratio for human resource development in centrally sponsored schemes from 60:40 to 90:10, with the central government bearing 90 per cent of the cost for five years.
Experts also suggested increasing the budget allocation for APEDA from Rs 80 crore to Rs 800 crore to boost farm exports, creating district export hubs and launching a National Goat and Sheep Mission.
As the government prepares for the upcoming budget, these recommendations highlight the pressing need for reforms and increased investment in the agricultural sector, particularly in light of climate change challenges and the goal of doubling farmers’ income.
Exporters List Major Demand
Exporters seek fiscal support measures in their pre-budget meeting with Sitharaman to increase the country’s exports to USD 2 trillion by 2030.
The country’s exports of goods and services have increased to USD 778 billion in 2023-24 from USD 478 billion in 2017-18.
The equalisation scheme will end on June 30 this year. It was started on April 1, 2015, and was initially valid for five years up to March 31, 2020.
The scheme helps exporters from identified sectors and all MSME manufacturer exporters to avail of rupee export credit at competitive rates at a time when the global economy is facing headwinds.
Exporters get subsidies under the ‘Interest Equalisation Scheme for pre and post-shipment rupee export credit.
Currently, the scheme provides an interest equalisation benefit at the rate of 2 per cent on pre and post-shipment rupee export credit to merchant and manufacturer exporters of 410 identified tariff lines at 4 digit level and 3 per cent to all MSME manufacturer exporters.
These sectors include handicrafts, leather, certain fabrics, carpets and readymade garments.
During April-May 2024-25, merchandise exports rose by 5.1 per cent to USD 73.12 billion, and imports rose 8.89 per cent to USD 116 billion.
Budget 2024 Date Full Budget
The full budget 2024-25 is expected to be presented in Parliament next month. Finance minister Nirmala Sitharaman is likely to table the union budget for FY25 on July 23 or 24. This will be the full union budget of the Modi 3.0 government. Earlier on February 01, an interim budget was presented.
