As India approaches Budget 2026, expectations among MSMEs remain tempered by on-ground realities around credit access, compliance complexity, and delayed cash flows. In an interaction with Tech Achieve Media, Gaurav Bhagat, Founder, Gaurav Bhagat Academy, shares a candid assessment of what previous Budgets have failed to deliver, the widening gap between policy intent and execution, and why structural reforms, rather than headline announcements, are critical to move India’s MSMEs from survival to sustainable growth.
TAM: What expectations from previous Budgets remain unmet or under-delivered, and why?
Gaurav Bhagat: Last-mile loan availability for MSMEs has been one of the most underfulfilled expectations. According to industry estimates, nearly 60% of MSMEs in India still rely on informal finance, despite the fact that programs like CGTMSE and ECLGS were punctual. Turnaround times are out of step with business reality, digital lending costs are expensive, and bank disbursement is still risk adverse. Capital delays frequently result in lost opportunities for founders and CXOs operating enterprises.
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Significant simplification of taxes and compliance has been another unfulfilled promise. According to World Bank-aligned assessments, even if India’s Ease of Doing Business scores have improved fundamentally, a mid-sized business still spends more than 250 hours a year on tax compliance. GST rationalisation, fewer rate slabs, and faster refunds have been discussed repeatedly, yet friction persists, especially for export-oriented and manufacturing-led businesses.
Finally, while capital expenditure has seen consistent headline growth, with allocations increasing by over 30% cumulatively in the last three Budgets, the trickle-down impact on private sector confidence and MSME participation has been slower than expected. Large infrastructure announcements inspire optimism, but without faster project execution, predictable payment cycles, and MSME inclusion in supply chains, the multiplier effect remains constrained.
As business leaders, what we seek from the Budget is not just ambition, but assurance, assurance that policies will translate into cash flows, compliance ease, and confidence on the ground. The opportunity ahead lies not in announcing more schemes, but in deepening, simplifying, and humanising the ones already in place.
TAM: Where is the biggest disconnect today between policy intent and on-ground MSME reality?
Gaurav Bhagat: From my perspective, the largest gap that exists now is between the real ease of access to money, markets, and regular payments on the ground and the policy focus on MSME support.
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Although laws correctly recognize MSMEs as India’s growth engine, accounting for over 45% of exports and over 30% of GDP, the truth is that, despite several initiatives, nearly 55–60% of MSMEs still have difficulty obtaining formal financing. Receivables are delayed, working capital cycles are prolonged beyond sustainability, and liquidity is still limited.
Compliance versus capacity is another area of disparity. Instead of decreasing cost and complexity, digital technologies and regulatory frameworks have developed more quickly than the typical MSME can adjust.
Although the execution is still disjointed, the aim is progressive. MSMEs will continue to function in survival mode rather than growth mode until policies result in quicker loans, predictable cash flows, and easier compliance at the last mile. This is a lost opportunity for the broader economy.
TAM: Which compliance or regulatory burden should Budget 2026 eliminate, not reform?
Gaurav Bhagat: If any regulatory burden is to go down, let it not be the fat compliance burden that eats away time money capabilities and talents and lead to growth, but we cannot see that as of now, against the massive 1400+ regulatory burdens and 13-17 lakh annual compliances that an average MSME grapples with, which keeps the entrepreneurial leadership busy from driving strategy to combing through paperwork. As most MSMEs are into surviving an ever increasing “compliance tax” on top of GST and TDS, with layered labor, taxes and multiple inspections, instead of reformable friction, the trouble they have is a structural drag on scalability and formalization.
Even PSUs and professional groups proposed putting a cap on audit for MSMEs and doing away with mandatory CSR, as these measures don’t do much to real business improvement: I would prefer for the government to abolish silly laws, relax procedural requirements, decriminalize the minor crimes and trust the entrepreneurs to succeed instead of introducing new ones. Deregulation will be the bees-knees for genuine capital, job creation and competitiveness.
TAM: Are AI, cloud, and digital public infrastructure accessible enough for small businesses today?
Gaurav Bhagat: In my opinion AI, cloud and DPI are now a strategic must-have rather than a beyond-the-horizon luxury. But small business ownership still exhibits a stark divide. On the plus side, the downward drive to quickly adapt AI is being demonstrated by over 96% Indian SMBs already taking the plunge.
Many claim automation and AI will be critical to growth and competitiveness in just a year ahead. But, only some 28% of SMBs currently use entry level cloud services.Globally, the everyday digital traction of MSMEs has been enabled by digital public infrastructure like UPI andAadhaar, with 73% citing digital for business growth.
The desire is there, the problem is practical access, inexpensive training, reliable connectivity and outcomes-driven applications. How much of the Indian MSME spine actually becomes an inclusive enabler will vary with how much of that gap is bridged.
TAM: Beyond headline announcements, what one structural change do founders and MSMEs expect Budget 2026 to deliver?
Gaurav Bhagat: If Budget 2026 is to achieve one policy intervention with truly lasting structural impact beyond headline announcements, this would be the formalisation of cheap, predictable credit to MSMEs, rather than simply affordable credit. At present, MSMEs constitute approaching 30% of India’s GDP and 46% of exports, yet most are still deposit-constrained and pushed into hardturn short- term credit and inventory financing, weakening the supply side growth and innovation potential.
The recent scaling of credit guarantees has released capital access but what remains to be institutionalised is sustained interest subvention and differentiated finance vehicles that cater to cash flow cycles and scaling intentions. To be comfortable running their businesses effectively, founders need policy reform, calibrated interest support taking sharing risk, plus predictability of GST and refunds embedded in their cash flow planning: one adjustment to their current operating model would catalyse the leap from survival to growth.
