The Modi government took two steps (demonetization, GST) in the first term which impacted Micro, Small and Medium Enterprises (MSME) sector. The small businesses had to face problems due to cash crunch and GST. However, traders supported the Modi government as they felt that these steps were in larger ‘National Interest’. The domestic traders’ body, Confederation of All India Traders (CAIT) had asked the 7 crore traders of the country to vote for BJP. The traders also started ‘whisper campaign’ to their customers to do the same. After being re-elected with an even larger majority, the government has decided to reward traders for their ‘faith’ in the government.
The Goods and Services Tax Network (GSTN) will offer free billing and accounting software to 80 lakh MSMEs with annual turnover up to 1.5 crore rupees. “GSTN has partnered with eight billing and accounting software vendors for providing software to the micro, small and medium enterprises, with annual turnover under Rs 1.5 crore, in a financial year without any cost to such taxpayers,” said the statement by released by GSTN. The software would help the MSMEs to account statements, manage inventory and prepare GST returns.
The move will improve efficiency and compliance burden, “Such taxpayers are nearly 80 percent in number under GST and thus this step is going to benefit a large number of taxpayers. GSTN on directions of GST Council has identified eight vendors to provide the accounting and billing software without any cost to such taxpayers,” said GSTN chief executive officer Prakash Kumar.
Modi government has taken many steps for the revival of MSMEs in the previous few years. The credit rules were eased up, regulatory norms have been standardized and tax incentives were offered to MSMEs. To ensure the welfare of people working in MSMEs, the government brought pension and provident fund schemes. The steps are showing up results as the credit growth has moved northwards. The total credit to MSMEs increased from 11.7 lakh crore rupees in December 2014 to 25.2 lakh crore rupees in December 2018. Therefore credit to small business increased by 115 percent in the last four years. The compound annual growth rate (CAGR) to entities was 26.1 percent while for individuals it was 15.7 percent.
Earlier, the Modi government announced Diwali bonanza to Micro, Small and Medium Enterprises (MSME) sector on Friday. The government announced many steps to support the MSME sector including faster approval of licenses, easier and cheaper credit. The 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. “Yeh naya 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.
As per a survey conducted by ‘Confederation of Indian Industry’ (CII), the Modi government generated 1.49 crore jobs per year in the MSME sector. That’s a whopping 6 crore jobs in the last 4 years. 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. The growth of the MSME sector will help the economy, job creation, and electoral prospects of BJP.