New Delhi: At the time when speculations of India speeding towards recession are ripe, Ministry of Commerce in close co-ordination with Ministry of Finance has prepared a roadmap to boost domestic trade in the country with special focus on small and medium businesses especially in areas away from traditional industrial belts.
“We have planned to reach out to smaller traders who contribute immensely to domestic trade in the country. There are many who still don’t access the various government schemes meant to boost their business such as easy loans. This time we will focus on rural and semi-urban areas in order to further instil the culture of entrepreneurship,” said an official, on conditions of anonymity.
This comes after Central Statistical Office (CSO), last week, in its official release stated that India grew at its slowest pace in the last 25 quarters. India’s gross domestic product (GDP) rate stood at 5 per cent in the April-June period of the current financial year.
Gross value added (GVA), which is GDP minus taxes, and, therefore, a more realistic proxy to measure economic activity, grew 4.9 percent in April-June 2019, compared to 7.7 percent in the same period last year and 5.7 percent in January-March this year.
The plunge in GDP was also reflected in market indices. BSE Sensex and NSE Nifty tanked significantly in early trade and continued its bearish run through the afternoon session. By the end of the day, Sensex dipped over 800 points at 36,522.18 while Nifty was at the 10,780-mark, down 238 points.
The Centre’s focus on medium, small and micro enterprises (MSME) stems from the fact that the sector has significant potential to contribute to employment generation and export, clubbed with the fact that, according to a report by Reserve Bank of India (RBI), lending to MSME by banks has slipped from 0.7 per cent in 2018 to 0.6 per cent this June quarter.
“The more number of MSMEs we have, the better it is for the economy. The plan is to nurture smaller ventures into productive, larger hubs of businesses. There is a lot of potential to be unlocked in the rural areas,” said another official who did not want to be named.
Queries to ministry of commerce remained unanswered.
India is currently “the second-largest startup movement in the world. Last year we added about 1,200 startups,” according to data shared last month by Ravi Shankar Prasad, Minister of Electronics, Information and Technology and Law.
The Centre’s plan to shift the spotlight to MSMEs can also be understood from the slew of measures announced by Finance Minister Nirmala Sitharaman last month.
The Finance Minister in her recent announcement promised to release the refunds from GST to MSME within 30 days. This has brought huge relief to this sector which is facing market problems for non-recovery of the payments.
Along with it, Centre also announced that in future all GST refunds shall be paid within 60 days from the date of application and all pending GST refund due to MSMEs will be paid within 30 days.
Additionally, the government also stated that the angel tax provision will be withdrawn for startups and their investors to lower its burden of compliance and boost sustainability.