The 2019 general election manifesto of the BJP’s has put special emphasis on Micro, Small and Medium Enterprises (MSMEs), startups and traders. The party promised to take the credit amount under the Credit Guarantee Scheme to 1 lakh crore rupees by 2024 from 19,000 crore rupees is 2017-18. Small traders have traditionally been core voters of the saffron party. However, they faced problems due to demonetization and GST implementation. To woo the community, BJP promised many incentives like loan disbursal, technology centers, accident insurance, merchant credit cards and the welfare board.
MSMEs are the backbone of the Indian economy. The sector is the second largest employer of the country after agriculture. As per a survey by CII, 6 crore new jobs were created in the MSME sector in last four years with the states of Maharashtra, Gujarat and Telangana creating highest number of jobs. Earlier in November Modi government announced MSMEs registered under GST will get 2 percent interest subsidy on new loans. The government also launched a website named psbloansin59minutes.com to provide easier and time bound access to loans for MSMEs. “Yehnaya Bharat hai, isme bankon ke baar baar chakkar lagana khatam (This is New India, here you don’t need to go to banks again and again for loans),” said Modi while addressing MSME players from across the country.
To encourage the startups, the promised collateral free credit up to 50 lakh rupees to entrepreneurs. “We will launch a new scheme to provide collateral-free credit up to 50 lakh for entrepreneurs. We will guarantee 50% of the loan amount for female entrepreneurs and 25% of the loan amount for male entrepreneurs,” read the manifesto. The party also promised to establish a seed startup fund with the amount of 20,000 crore rupees. “We will continue to promote and encourage Staups through creation of a ‘Seed Staup Fund’ of 20,000 crore,” reads the manifesto.
In a recent move, the Modi government has simplified the process for startups seeking exemption from ‘angel tax’. The government eliminated the need of certification from an inter-ministerial body for the process of tax exemption. In terms of total number of Startups, comprising tech and non-tech areas, India is among the five largest hosts in the world along with China and the US. The number of Startups in both India and China stand at 10,000 each. The US has the most number of total 83,000 budding entrepreneurs. In recent years, the Indian startup ecosystem has also taken off and has matured. Factors such as availability of funding, consolidation activities by a number of firms, evolving technology space and a burgeoning demand within the domestic market have led to the emergence of startups.
From the manifesto it is very clear that if Modi government comes to power, MSMEs and startups will be focus sectors. These sectors have high potential for job creation in the formal and informal sector. Creation of well-paying jobs in large numbers is the need of the hour as India is young and aspirational. Therefore the party has set the tone of policymaking in right direction in the manifesto.