Budget 2024: Push to small businesses can boost jobs, says SBI bossman

The right kind of impetus to small businesses can add around $30 billion to the GDP, given their capacity to generate jobs and exports, while the Production-Linked Incentives (PLI) scheme also needs to be encouraged, said Soumyakanti Ghosh, Chief Economic Advisor at the State Bank of India (SBI), in a note ahead of Budget 2024.

“PLI scheme has been a game-changer towards augmenting incremental manufacturing capacity, drawing fresh investments to the tune of Rs 1 trillion, incremental sales of Rs 8.61 trillion (mostly by Apple) of which exports being 40%) and job generation of 8.78 lakh,” the SBI’s Chief Economic Advisor said in the note.

“Given the fact that small businesses contribute about 45% of exports and nearly 40% in manufacturing GVA, the budget should offer a separate PLI scheme for them (MSMEs) should boost the sectoral contribution further and facilitate job generation with representation from across textiles, garments, handicrafts, food processing, leather, electronics, auto components, bulk drugs etc,” Ghosh elaborated.

The note came ahead of Finance Minister Nirmala Sitharaman presenting the first Union Budget of Modi 3.0 on July 23, for the fiscal year 2024-’25 (FY25). The note from the SBI economic research department has also highlighted why it is vital to ensure tax equilibrium between bank deposits and other kinds of investment.

The PLI scheme was introduced by the Narendra Modi government in its second term with the aim of boosting domestic manufacture that had not grown beyond 16.5 per cent for more than 20 years. The Centre subsequently also created a mechanism to offer tax incentives to firms that manufacture in India.

Automobile, aviation, electronics and technology products, food products, pharmaceutical products, steel and textiles are some of the sectors that have benefitted from the PLI scheme, which has also boosted exports in areas as mobile, electronic products and pharmaceuticals.