Budget 2022: ECLGS extension, Ease of Doing Business 2.0 to help MSMEs recover from pandemic blues

Sitharaman announced the extension of Emergency Credit Line Guarantee Scheme (ECLGS) till March 2021.

New Delhi: Finance Minister Nirmala Sitharaman on Tuesday (February 1) announced a slew of measures to bolster the Micro, Small & Medium Enterprises (MSMEs) of the country. From the extension of the Emergency Credit Line Guarantee Scheme (ECLGS) till March 2021 to infrastructural announcements such as 25,000 km of new highways and Gati Shakti Masterplan, MSMEs are expected to benefit from the moves.  

Dr Rashmi Saluja, Executive Chairperson, Religare Enterprises Ltd, said that the provisions for MSMEs will give a big boost to the sector that has borne the maximum brunt of the COVID 19 pandemic.

“Setting up of the long-awaited bad bank will ease the bad loan burden by taking over the assets. This will help the banks focus on credit growth, which was hit because of the Covid pandemic. Asset Reconstruction Company and Asset Management Company to house stressed assets will also help move the bad assets currently lying in the books of Indian banks,” Saluja said. 

Saluja added that the Rs 20,000 crore capital infusion into public sector banks announced will allow more room for provisioning of bad assets and boost credit growth, provided demand makes a comeback.

Ramesh Nair, CEO, India & Managing Director, Market Development, Asia at Colliers, said, “The Budget made several announcements to spur growth of the logistics sector in the country. The Budget announced that about 25,000 km of new highways will be built this year. Moreover, Gati Shakti Masterplan for expressways,100 new cargo terminals for multi-nodal logistics, and development of urban metro systems will give a big boost to new warehousing and logistics facilities across the country.” 

Pointing out that the government also extended the ECLGS up to March 2023, Nair said that this will go a long way in supporting the MSME sector and reviving industrial activity. 

“This has immense scope to drive demand for warehousing and logistic sectors. The government repealed about 1,490 union laws, paving the way to enhance ease of doing business. The government also plans to launch ‘Ease of Doing Business 2.0.’ This should include more dynamic aspects and make India a more investment friendly destination,” he said. Also Read: Union Budget 2022: Experts laud FM for raising the capital expenditure to Rs 7.50 lakh crore in 2022-23

Kapil Bardeja, CEO & Co Founder- Vehant Technologies says, "Government's decision to provide an extension under CGMSE till march 2023 to the MSMEs was much-needed support & boast to the MSME sector and this financial support will strengthen the confidence of small & medium scale industries who were struggling during the pandemic. The percentage growth of Capex 2022-23 and the overall rise in infrastructure, will eventually boost the security industry as the need for security & screening equipment will increase. The Government promotes Make in India, Vocal for Local, and Atmanirbhar Bharat visions, by laying out more money for local contractors under the defense sector, now the defense will have to invest 68% of its budget procuring equipment from domestic players. Given the current times, the budget is focused on India's growth and we anticipate this should act as a multiplier effect to the Indian MSME ecosystem. Overall, the budget is well designed to give a boost to local manufacturing and improve the infrastructure of the country." Also Read: Budget 2022: Kisan drones, services in PPP mode, chemical-free natural farming to open new doors for agriculture