The Micro, Medium and Small Enterprises (MSME) sector was expecting a budgetary allocation or fiscal stimulus in Budget 2022. That was not to be. However, Finance Minister Nirmala Sitharaman announced a slew of measures targeted at making efforts to rejuvenate a key sector that continues to suffer from the effects of the two-year-long COVID-19 pandemic.

Share Market Live

NSE

The Union Budget 2022 provided an extension of the Emergency Credit Line Guarantee Scheme (ECLGS) until March 2023. Under the scheme, originally supposed to end at the close of the current fiscal, small businesses could secure collateral-free loans to tide over tough times brought about by the pandemic.

Further, the FM also announced that ECLGS cover would be extended by Rs 50,000 crore, which would in effect total to Rs 5 lakh crore.

Catch all the latest updates on Budget 2022 here.

Meanwhile, small businesses hailed the government's PLI scheme in the context of its support to the MSME sector. "The production-linked incentive (PLI) scheme has received tremendous response from domestic MSMEs who were looking to the government for support during tough times," said Raghunandan Saraf, Founder and CEO, Saraf Furniture.

The scheme, according to government claims, has the potential to create 6 million new jobs and additional procurement of Rs 30 lakh crore over the next five years.

Another novel measure announced in Budget 2022 was the Centre's "One Station, One Product" programme, which aims at facilitating local supply chains through the country's vast rail network and the setting up of a hundred PM Shakti Cargo terminals over the next three years.

"This announcement in particular (Cargo Shakti terminals), especially as it involves developing cargo terminals, will hugely impact small farmers and MSMEs," said Virendra Ranawat, Co-Founder of WoodenStreet.

However, some MSMEs believe the budget ought to have gone the extra mile to enable more 'ease of doing business' for Indian start-ups. "A slight focus on easing trade and taxation policies for MSMEs and facilitating more freedom to do business was expected from this year’s budget announcement," said Chandan Garg, Chairman and MD, Innovana Group.

On the positive side, the government's extension of its ECLGS scheme could have a rub-off effect on Indian real estate, given that the MSME sector has traditionally played a crucial role in the sales of low-cost homes.

"We saw home loan eligibility for many prospective buyers of affordable homes impacted by the pandemic due to loss of jobs and many MSMEs being shut down, resulting in significantly lower sales in this category," said Anuj Puri, Chairman at Anarock.

"The FM has now tried to rejuvenate the MSME sector, which has a multiplier effect on the growth of the overall economy," Puri added.

Click here for the LIVE updates on Budget 2022