MSMEs continue to face several headwinds such as low consumption expenditure, high commodity prices, elevated freight costs and supply chain disruptions, in addition to the operational disruptions caused by new variants of the virus. Given this difficult operating environment and market condition, we expect government to provide considerable relief in the Union Budget for the MSME sector

1. MSME Sector
Expectations from
Union Budget 2022

2. Introduction
• MSMEs continue to face several headwinds such as low
consumption expenditure, high commodity prices, elevated
freight costs and supply chain disruptions, in addition to the
operational disruptions caused by new variants of the virus.
Given this difficult operating environment and market
condition, we expect government to provide considerable relief
in the MSME Budget.

3. Address the Issue of Delayed Payments:
• Since the launch of MSME Samadhaan in Oct 2017, only 22% of the
applications have been either disposed or mutually settled. While 21% of the
applications have been rejected, a whopping 57% of the applications are either
currently under consideration or yet to be viewed by the council. It could be
several months, if not years, before these applications are resolved. Measures to
expedite this process is expected. To reduce delays in the future, the government
should help MSMEs adopt a standard form of commercial contracts and look for
ways to automate all the process from application filling to disposal. A unified
trade payment database, on patterns of credit bureau could be envisaged.

4. Ease of Access to Capital:
• Measures to operationalize the Fund of Funds scheme on a fast-track
mode is expected. Disruptions to business resulting from strict lockdowns
to control the third wave could revive the demand for restructuring of
loans, including already restructured loans. MSMEs have already faced
severe financial crisis during the previous two waves and thus would need
special incentives, loan restructuring and moratorium.