India’s budget praised for emphasis of smaller firms
India’s latest Budget, which took place on 23 July, focused on help for the agricultural sector, the introduction of employment-related schemes, financial support to the MSME sector and infrastructure development.
Introducing the Union Budget 2024-25, Finance Minister Nirmala Sitharaman also announced a commitment to reducing the fiscal deficit to 4.5%, from 4.9%.
The government cut customs duties at the same time making changes in the capital gain taxes for the financial year.
Business leaders’ responses were generally positive, as they commended the 2024 budget for striking a balance between short-term needs and long-term goals.
Manish Shah, MD & CEO at Godrej Capital, said the budget “laid the foundations for a resilient and thriving economy”. He praised the government’s commitment to bolstering the MSME sector, which he said had a pivotal role to play in the India’s economic advancement.
Shah noted that the introduction of a new credit assessment model based on the digital footprints of MSMEs “suggests a promising step towards improving financial access and fostering sectoral growth”.
Thomas John Muthoot, Chairman of Muthoot Pappachan Group, a financial services conglomerate, described the 2024-2025 Budget as a transformative step towards India’s economic future. He praised the prioritization of jobs, upskilling the workforce and MSME support, which he said “[will] create millions of new jobs and enhance workforce participation”. He added: “MSMEs will benefit from credit guarantees, expanded Mudra loans, and a new assessment model for MSME credit, boosting small business growth and resilience.”
MUDRA stands for Micro Units Development & Refinance Agency, which was set up to provide funding to the non-corporate small business sector through a variety of financial Institutions
Muthoot also highlighted significant investments in rural development, including natural farming and high-yield crop varieties, which he said will revitalize agriculture.
SMFG India Credit’s Chief Business Officer, Ajay Pareek, praised the FY25 Union Budget “for its robust initiatives to enhance credit access and foster growth in the vital MSME sector”. He highlighted the introduction of a credit guarantee scheme for MSMEs in manufacturing, aimed at facilitating term loans for machinery and equipment purchases. “This transformative measure will provide access to credit to a wider target group, thereby accelerating economic growth,” he said.
Pareek said that a new digital footprint-based assessment model for MSMEs will revolutionize credit accessibility, especially for those lacking formal accounting systems.
He said: “As India moves towards a $5 trillion economy, these measures will empower MSMEs to compete globally and contribute substantially to economic development”, and he reaffirmed SMFG India Credit’s commitment to supporting these enterprises.
The allocation of approximately £27 billion for job and skill development schemes over the next five years is set to empower younger workers and foster a skilled workforce, essential for driving innovation in the fintech sector, said Jayesh Jain, Group CFO of Balancehero India.
Jain highlighted the budget’s focus on social justice and inclusive human resource development, saying they would ensure “growth benefits reach every segment of society”.
He added: “For the fintech industry, simplified tax exemption regimes and TDS [tax deducted at source] adjustments will streamline operations, creating a more favourable business environment.
“Abolishing the ‘angel tax’ for all classes of investors is a ground-breaking move to bolster the Indian start-up ecosystem, boost entrepreneurial spirit, and support innovation.
“Enhanced support for MSMEs, including the new credit guarantee scheme, will bolster the backbone of the economy, driving innovation and job creation. This budget sets a promising trajectory for inclusive growth, positioning India as a resilient and forward-looking economy,” he said.
Focus on youth empowerment and job creation
Anuraag Saxena, CEO of E-Gaming Federation, praised the budget’s strong emphasis on youth empowerment, job creation and employment-linked skilling. He noted that the Finance Minister’s plan aims to provide employment opportunities for more than 40 million young workers over the next five years.
Saxena said: “Jobs are a primary driver of economic growth, and the implementation of new initiatives and allocations would not only improve the employment situation but also significantly impact the development of a skilled labour force for all industries.”
