While presenting the Union Budget in Parliament on Wednesday, Union Minister for Finance Nirmala Sitharaman proposed to continue the financial sector reforms and innovative use of technology which have led to financial inclusion at scale, better and faster service delivery, ease of access to credit and participation in financial markets.
She announced that the revamped credit guarantee scheme for MSMEs, proposed in the previous Budget, will take effect from 1 April 2023 through the infusion of Rs 9,000 crore in the corpus. “This will enable additional collateral-free guaranteed credit of Rs 2 lakh crore. Further, the cost of credit will be reduced by about 1 per cent,” she said.
Giving significant relief to MSMEs, the minister proposed that in cases of failure by MSMEs to execute contracts during the Covid period, 95 per cent of the forfeited amount relating to bid or performance security will be returned to them by government and government undertakings.
To settle contractual disputes of government and government undertakings, wherein an arbitral award is under challenge in a court, a voluntary settlement scheme with standardized terms will be introduced. This will be done by offering graded settlement terms depending on the pendency level of the dispute.
Stating that MSMEs are growth engines of the economy, the finance minister said that micro-enterprises with a turnover of up to Rs 2 crore and certain professionals with a turnover of up to Rs 50 lakh can avail the benefit of presumptive taxation. She proposed to provide enhanced limits of Rs3 crore and Rs 75 lakh respectively; to the taxpayers whose cash receipts are no more than 5 per cent. Moreover, to support MSMEs in the timely receipt of payments, Sitharaman further proposed to allow a deduction for expenditure incurred on payments made to them only when payment is actually made.
The minister also announced the setting up of a National Financial Information Registry to serve as the central repository of financial and ancillary information. “This will facilitate the efficient flow of credit, promote financial inclusion, and foster financial stability,” she said.
Sitharaman added that a new legislative framework will govern this credit public infrastructure, and it will be designed in consultation with the RBI.