FM doubles budgetary allocation for MSMEs, but one scheme gets the king's share

For the Covid hit MSMEs, the key highlight of the Union budget 2021 remained a higher outlay to the sector.

To accelerate the revival of the Covid- hit sector, Finance Minister Nirmala Sitharaman has made a provision of Rs 15,700 crore for the sector. The sector, touted to be the backbone of the nation’s economy, was allocated Rs 7,572 crore in the previous union Budget of 2020-21.

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“We have taken a number of steps to support the MSME sector in this Budget. I have provided Rs 15,700 crore to the sector more than double of the last year,” Sitharaman said.

We delve deeper into key figures relating to various Central schemes and see how they stack up with that of last year’s figures.

In terms of total outlay earmarked for all the schemes/ projects falling under Development of Khadi, Village and Coir Industries, this year’s outlay stands at Rs 905.04 crore compared to Rs 1525.94 crore last year, meaning a 40.68% drop. As a result, all the sub-schemes under this head have seen drastic reductions in their allocations.

The Government’s popular scheme called SFURTI scheme (Scheme for Fund for Regeneration of Traditional Industries) has been allocated Rs 170 Crore (a drop of 63.42 YoY). It’s noteworthy that the SFURTI Scheme was launched in 2005 for making traditional Industries more productive and competitive by organizing the traditional Industries and artisans into clusters to provide support for their long-term sustainability.

The steepest decline in this category came for the Solar Charkha Mission, whose previous figure of Rs 100 crore now stands at Rs 5.04 crore.

Similarly, the allocation to Khadi Vikas Yojana has also been slashed from Rs 370 crore to Rs 250 crore (32.43% decline). At Rs 50.00 crore, Gramodyog Vikas Yojana also witnessed a cut to the tune of 51.41% vis-à-vis the last year’s allocation.

Blow to technology centric schemes

Looking at the finer details of this budget, it becomes clear that it brought massive cuts to technology centric schemes meant for MSMEs.

The total outlay to all the Technology Upgradation and Quality Certification schemes has been slashed from Rs 683.91 crore Rs 330.31crore (51.70% decline)

A look at the figures for the MSME ministry’s popular ASPIRE (Promotion of Innovation, Rural Industry and Entrepreneurship) scheme reveals that — at Rs15 crore, its outlay has been halved compared to the last year’s figure. Introduced in 2015, ASPIRE is aimed at accelerating entrepreneurship and to promote startups for innovation and entrepreneurship in agroindustry.

Additionally, the government this time has cut the outlay of Credit Linked Capital Subsidy and Technology Upgradation Scheme — from Rs 653.91 crore to Rs 315.31 crore (51.78% decline)


International Cooperation Scheme saw a decline in its figures — from Rs 20 crore to Rs 15 crore.

The big help to Covid hit firms under PMEGP

To help the MSMEs face the challenging times, the government has increased outlays for many MSME targeted schemes as well. Noteworthy is the total outlay for Prime Minister Employment Generation Programme (PMEGP) and Other Credit Support Scheme, which has seen a steep hike this time — from Rs 2800 crore to Rs 12499.70 crore.

Within this subhead, PMEGP scheme in itself has seen a decline from Rs 2500 crore to Rs 2000 crore.

So where has the bulk of the money gone under this scheme? The biggest takeaway of this category has been the allocation earmarked to Guarantee Emergency Credit Line (GECL) facility to eligible MSME borrowers. With the introduction of the scheme, the Government wants to focus on helping Covid-hit MSMEs by allocating Rs 10,000 crore. This is about 64% of the total allocation for the MSME sector. Interestingly, this also means that the large share of the government’s doubling of allocation to MSMEs this year will be dedicated towards its flagship ECLGS scheme. The Emergency Credit Line Guarantee Scheme, which provides 100% guarantee coverage of up to Rs 3 lakh crore to eligible MSMEs.

Further, Distressed Assets Fund has been allocated Rs 300 crore this year, while allocation for Interest Subvention Scheme for Incremental Credit to MSMEs is at Rs 199.66 crore this year.

Marketing support to MSMEs get a jolt

This year, the government has drastically reduced the outlay to many marketing based schemes for the MSMEs.

The total outlay for Market Promotion Scheme – has been reduced from Rs 74.63 crore to Rs 39.96 crore this year. Under the same category, the outlay for Procurement and Marketing Support Scheme — has been reduced from Rs 54.59 crore to Rs 24.96 crore. With major fairs and exhibitions being cancelled this year, the Marketing Assistance Scheme (MAS), which provides MSMEs the support to market their products in the domestic and international markets, has not been allocated any amount.

International Cooperation Scheme, another popular scheme in this category, saw a decline in its figures — from Rs 20 crore to Rs 15 crore. The scheme provides financial assistance to organizations with a view to facilitate visit/participation of MSMEs in international exhibitions/trade fairs/buyers-seller meets, etc.

Skill development gets a boost

The outlay for Entrepreneurship and Skill Development centered schemes has been increased slightly from its previous figures of Rs 556.47 crore to Rs 570.93 crore. Under this, the government has increased the share of Fund of Fund (FoF) scheme -from Rs 200 crore to Rs 350 crore now.

FM doubles budgetary allocation for MSMEs, but one scheme gets the king's share FM doubles budgetary allocation for MSMEs, but one scheme gets the king's share Reviewed by TechCO on 2/05/2021 Rating: 5

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