India is on the precipice of change with the union budget 2024 announced by the Finance Minister Nirmala Sitharaman for the country’s future. This budget which is to propel the country towards the dream of ‘Viksit Bharat’ is an amalgam of vision and feasibility. It lays emphasis on the strategic segments like MSMEs, industrialization, energy, digitalization, and insolvency. Through these critical areas, the government aims at establishing a sound framework of development that would enhance the nation’s prosperity in an inclusive manner. When one looks at the proposals, one can clearly see that this budget could be transformational for the country, taking it to a path of economic transformation and sustainability.
While discussing the economy of India, it is impossible to omit Micro, Small, and Medium Enterprises (MSMEs). They have a great influence on employment and industrial production. Hence, the concern of the Finance Minister towards this sector is not only admirable but very much required. The scheme, Credit Guarantee Scheme for the MSMEs is nothing less than a masterpiece. By providing up to ₹100 crore in guarantee cover for term loans, the government is going to address one of the most significant pain points for small businesses, which is access to finance.
“Credit guarantee schemes for MSMEs, increasing the limit of Mudra loans to ₹20 lakh for those who have repaid previous loans, creating alternative methods to evaluate MSME loan eligibility, and expanding SIDBI branches are all expected to provide the much-needed access to credit and additional support for further growth of the MSME sector,” said Ajay Kumar Srivastava, Managing Director & CEO of Indian Overseas Bank, to The Hindu.
Furthermore, the change of the credit assessment model to be based on digital footprints is progressive. It is also important to note that the standard credit scoring techniques do not include many of the MSMEs that lack formal accounting systems, even though they make up a large proportion of this sector. Through the help of digital data, credit can be granted to more firms; this will boost innovation at ground level.
But, one would like to know if these measures would be sufficient enough to overcome the deeply rooted problems of MSMEs. Credit is important but it can only be granted if other supporting structures such as the business environment and doing away with bureaucratic induced barriers are put in place.
One of the major points of the budget is the provision of internship for the youth which is a noble cause. The government is trying to minimize the gap between classroom learning and actual working environment by exposing the learners to real life business environments. However, the question lies in details. Will firms be willing to incur the training costs and invest in the training of interns adequately? For this initiative to work, it has to receive the full support of the private sector and its players to cultivate young talent.
Another massive project is the strategy of creating “plug and play” industrial parks in 100 cities. These parks equipped with necessary infrastructure intend to attract investment and foster industrial development. This could be the turning point, especially if it will be able to overcome the bureaucratic obstacles that usually affect such enormous initiatives. It is here that there had been always issues with the central and state governments for implementation of such schemes.
This declaration of Critical Mineral Mission is one of the clear indications of the fact that the government is proactive. At the same time, supply chains are gradually shifting to global ones, and it is necessary to assess the stable availability of the key minerals for further industrialization. This is a part of this mission through import together with local manufacturing and recycling as a strategic method towards the protection of India’s mineral base.
However, one cannot help but doubt the possibility of implementing such an intense approach. Exploration and production of oil and gas through offshore and onshore activities are exerting immense pressure on environment and social structure. Government will need to be very sensitive and work on balancing the economic growth with conservation of the environment and promotion of people’s rights.
The idea to have Digital Public Infrastructure (DPI) applications across several fields is an indication that the government stands ready to use technology for the betterment of the society. Hence, in areas of credit, e-commerce, education, and healthcare, these applications can bring about improved productivity and many innovations.
Yet, there is a flip side. The digital divide in India has not been closed; there are still many people who are not covered even by basic internet services. Hence, for DPI to bring the change, the government has to pay equal emphasis on providing the technology solutions to the needy areas of the country.
The budget has rightly put emphasis on the further enhancement of Insolvency and Bankruptcy Code (IBC) and Debt Recovery Tribunals (DRTs) which will go a long way in helping to recover bad loans. A sound insolvency process is very important in the health of the financial system and to free capital to be used in productive activities.
New IBC tribunals and a unified technology system will contribute to a faster reinstatement. Still, the efficiency of these measures will highly depend on the measures’ realization. Litigation and legal formalisms have always been a problem in insolvency matters, and it is uncertain whether these changes will effectively rectify these problems.
In conclusion, one could state that the budget introduced by the Finance Minister is a clear-cut and ambitious vision of India’s development. However, the success of this budget will depend on the implementation. The government has laid out big goals that need to be accompanied by sound planning and good governance. Although the roadmap for ‘Viksit Bharat’ is quite clear, the road ahead is steeped with challenges which will need commitment and efforts from all the stakeholders. This budget could be the harbinger of a new era of growth and prosperity for India, if the goals are met to the optimal extent.
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