Kolkata: Amid concerns over the third wave of Covid on India’s economy, Union Finance Minister Nirmala Sitharaman is set to present the Union Budget on Tuesday, February 1, 2022.
Let’s take a look at what Bengal Inc expects from the forthcoming budget:
Kuldip Maity, MD & CEO, Village Financial Services (VFS): Microfinance institutions play a crucial role in financial inclusion by providing financial access to underserved segments in the country. But the pandemic in the last two years has adversely affected the business operations of micro lenders, small and mid-sized MFIs in particular. Loan disbursements and collection efficiencies dropped significantly. However, the sector is showing signs of recovery with improvement in collection efficiency and increase in disbursal amounts. A recent report by a credit rating agency also indicates better growth prospects for microfinance institutions in days ahead on the back of healthy demand from rural areas and increasing economic activity. But to achieve normalcy and grow further, MFIs require more support including liquidity measures, from the Government. In view of this, we would welcome an initiative from this budget to extend the credit guarantee scheme with a fresh allocation of Rs.10,000 crore for the Microfinance sector, with higher provision for East and North Eastern States. The credit guarantee scheme announced in June last year, played a key role in facilitating credit to the smallest of the borrowers amid these difficult times, and extension of the same with a fresh allocation till FY23 will result in higher financial inclusion and increased benefits for households at the base of the pyramid. It would also allow micro lenders to expand their reach and cover more number of distressed borrowers who are in search of emergency loans to revive their livelihood hit by pandemic.
Alok Biswas, MD & CEO, Janakalyan Financial Services: MFIs play a pivotal role in financial inclusion especially in credit delivery to the last mile. In this pandemic, when the livelihoods have been severely impacted in lower income groups, they are facing huge cash flow mismatch, budget should think about providing some relief to them through MFIs. Most of the smaller (means less than 500 crores) MFIs are facing liquidity issues, in real terms collection efficiency has not grown much. Extending Credit Guarantee Scheme MFI scheme till 2023 is one solution. Another solution providing quasi equity to MFIs through Govt. initiative like erstwhile IMEF. Another major issues are asset classification and provision norms, overdue more than 90 days should be given some sort of relaxation unlike now. Some major initiatives to be taken for the beneficiaries also to overcome the huge overdue interest burden for the delay in repayment.
Raj Agarwal, Director, Surya Food Farms Pvt. Ltd: We would welcome measures from the budget for the pandemic affected food sector, especially the smaller players in this sector. It was impacted severely and seen a massive layoffs. The sector needs a thrust from the government to bounce back. Measures from the budget can not only help the sector, smaller companies in particular, to bounce back but grow further and generate livelihood. We would also urge the Government to reduce the GST Slab to help the smaller companies grow. We are hopeful that Hon’ble Finance will deliver strong budget to boost the economy.