Focus On Capex; Review MSME Schemes: Assocham In Pre-budget Meeting With FM

In the pre-union budget 2024 meeting with finance minister Nirmala Sitharaman, industry body Assocham has suggested that the government should focus strategically on capital expenditure, prioritising investment in infrastructure, education and healthcare.

‘’By prioritising investments in infrastructure, education, healthcare, and other critical sectors, governments can stimulate economic growth while maintaining fiscal discipline.”  Sanjay Nayar, President, Assocham said.

Another key area of focus, Nayar said, should be the micro, small and medium enterprises (MSMEs. There is a pressing need to establish a dedicated working group tasked with identifying underperforming schemes related to MSMEs. Such an initiative would systematically assess the effectiveness of current programs, pinpointing areas where interventions are falling short in supporting MSMEs. 

He added, “By conducting thorough evaluations and gathering empirical data, this group can recommend targeted reforms or adjustments to policies, ensuring that government initiatives align closely with the evolving needs and challenges faced by MSMEs.”

The Assocham pre-budget presentation also suggested the establishment of MSME universities across the country. Such moves would boost employment generation through MSMEs while enhancing entrepreneurship in the country.

''There is a compelling need to establish MSME universities with specialised courses and training programs aimed at enhancing the competitiveness of SMEs on a global scale These universities would serve as hubs of knowledge and innovation, equipping MSMEs with essential skills in areas such as technology adoption, financial management, quality management, market strategy, and compliance with international regulations," the President said.

In connection with the development of the northeast region, Nayar suggested the need to augment infrastructure development in the region as well as set up more industrial parks and SEZs there. The chamber suggested raising the basic income tax exemption limit from Rs 3 to 5 lakh to provide significant relief to individual taxpayers and increase their disposable income.

Besides, the current standard deduction which has remained unchanged at Rs 50,000 since 2019 should be increased to Rs 100,000 to adjust for inflation and rising living costs. It may also be linked to the salary as a multiple thereof for a meaningful impact. 

The chamber emphasised on the need to boost consumption of the middle class by extending tax benefits, leaving them with more disposable income. This kind of tax concessions to the middle class would lead to sustainable growth in consumption, without leaving an expansionary impact on the economy and the fiscal position of the government.