The Wednesday Meetup of 5th February 2020, held at Laghu Udyog Bharati Central Office in Nagpur was a special occasion with one of the most eminent experts of Banking, Finance & Economics of our country as well as consultant to major national banks including the Reserve Bank of India Shri Sudhakar Atre sir decoded the Budget 2020 for the MSMEs of India.
Eminent members who attended the meeting include Shri Udayan Shrouti, LUB Nagpur ekai President as well as past president of LUB Nagpur ekai & past president of The Vidarbha Plastic Industries Association Shri Shrikant Dhondrikar along with LUB National Secretary Shri Sunil Sirsikar along with a dozen other members.
The meeting started well before 18:00 the scheduled time with some hangover of the earlier meeting where the topic of how to create space or market for you product/services was extensively discussed. Until the arrival of our chief guest, this topic was discussed at length with inputs from Shri Dhondrikar, Shri Joglekar and Shri Udayan Shrouti. As members started arriving and the topic moved on to the budget it was with gleamy eyes that everyone was waiting to understand the offering of the Union Budget 2020 for MSME entrepreneurs.
Without much fanfare and minimal introductions, as has been the format of the Weekly Wenesday meetups, started on the first Wednesday of 2020, Shri Sudhakar Atre started his analysis of the budget from the perspective of MSME Industry, especially because there had been several mixed reactions otherwise in the SME Industry community and it was unclear as to exactly how the benefits announced in the budget will be implemented and eventually impact their revival.
Meticulous as he is Atre Sir started with the exact count of words Hon. Minister of Finance and Corporate Affairs of India Smt. Nirmala Sitharaman had devoted to MSME in the entire Union Budget 2020 and that is 291 to be precise. He touched upon all major provisions that have focused on MSMEs like the TReDS (Trade Receivables Discounting System) platform, which is an institutional setup for flow of finance to micro, small and medium enterprises (MSMEs) through multiple financiers at a competitive rate. However Atre sir is of the opinion that rather than or in addition to this facility, the government should make it compulsory for Large Corporates and PSUs to issue LCs (Letter of Credit) to MSMEs along with their purchase order. This will ensure that the cost of delayed payments is borne with the large industries in place of the MSMEs.
In a landmark announcement to offer relief to the cash-strapped MSME sector, FM Nirmala Sitharaman announced proposals to make necessary amendments to the Factoring Act of 2011 to allow Non-Banking Financial Companies (NBFCs) to be a part of TReDS. NBFCs will be pitching to finance the MSME cases on this platform, however, this too has been agreed by MSME entrepreneurs as an extension of helping hand to NBFCs who have been hit hard with double digit NPA figures due to their lending in the housing and real estate sector.
Hon. Minister in her speech had quoted that “More than 5 lakh MSME benefited from debt restructuring last year”, which was fiercely debated in the meeting as almost everyone was of the opinion that almost all of the beneficiaries of this debt restructuring were Mudra loans micro units.
Subordinate Debt, which will be provided by banks as quasi equity and would be fully guaranteed through credit guarantee trust for medium and small entrepreneurs. The corpus of the CGTMSE would accordingly be augmented for by the government as pointed out by the Hon. Finance Minister. Shri Sudhakar Atre sir handled this announcement with caution and opined that there must be a Monitoring agency built for keeping an eye over the this facility and Laghu Udyog Bharati must take up the creation of this monitoring agency with the Finance Ministry on a national level.
Shri Atre also emphasised that there are several such positive announcements by the Finance Minister, in this budget as well as earlier, but banks are not complying with these schemes and MSME entrepreneurs are suffering big time all across India. This is precisely why a monitoring agency needs to be setup which will oversee compliance by banks in the letter and spirit of the government’s initiatives.
Atre sir also welcomes the measures aimed at facilitating growth of the country’s micro, small and medium enterprises including raising the turnover threshold for audit of their accounts to Rs 5 crore and a scheme to provide subordinate debt to MSME entrepreneurs. Besides, the government has also asked the Reserve Bank to extend the debt restructuring window for micro, small and medium enterprises by a year to March 31, 2021, Smt Sitharaman said.
Over and above the topic of budget and Shri Atre sir’s analysis and discussions by the members, there were several different issues discussed such as a possibility of MSME entrepreneurs sending their second generation to other fellow entrepreneurs, perhaps starting within the Laghu Udyog Bharati community to get trained for running their family businesses and discussions surrounding the possibilities.
Another important topic touched by Shri Sudhakar Atre and which was agreed to be taken up for another such session with him was about Organisation Building and Visibility to ensure Laghu Udyog Bharati, which is doing so much work for the welfare of the MSMEs nationally and has been successfully implementing ground level problem assessment, facilitating feedback to Ministries and departments at Local, State and National level and ensuring it gets incorporated in policy making is all more than commendable. Unfortunately though, Atre sir pointed out that neither does Laghu Udyog Bharati get the credit of all this work, nor does it enjoy the reputation of such a large, deep rooted, hard working and influential organisation and this must change.