MSME-focused Budget Reaction

Jaya Vaidhyanathan, CEO, BCT Digital.

Budget 2024 has introduced nine main priorities to boost the economy, including notable rewards for taxpayers who have opted for the new regime. From a banking and fintech perspective, it has tabled several positives:

The emphasis on Digital Public Infrastructure for applications, including credit, is welcome. It will help formalize lending processes, thereby expanding the market share for banks and fintech players. A vision for the financial sector has been announced to enable our country to become a fintech powerhouse. The success of UPI and the JAM trinity needs to be monetized at a global level. While it’s still early days, this is good news. The announcements regarding taxonomy for climate risk are welcome, as it is important to have a homegrown framework for climate risk rather than adopting those from countries with different climate and industry conditions to ours.

Overall budget 2024 has brought forth some interesting perspectives, setting the stage for a transformative financial landscape ahead, focused on growth and development.

JB Singh, Director MOVIN Express

This year’s Budget is a major step towards supporting employment and skill development, with a strong focus on infrastructure and the growth of MSMEs. The new credit guarantee scheme for MSMEs will simplify access to loans, while the updated assessment model and credit support during tough times will further assist businesses. The creation of twelve new industrial parks will greatly improve infrastructure and boost economic growth. Additionally, the reduction of customs duties on vital minerals like lithium and cobalt will boost the electric vehicle and battery storage sectors. These initiatives have the potential to position India as a global leader and strengthen domestic logistics infrastructure.

Sachin Agrawal, Co-Founder & CEO at Bizongo

“It’s a significant move that the government is putting special attention on MSMEs and the manufacturing sector through this budget. The newly announced credit guarantee scheme and term loans will enable MSMEs to purchase machinery and equipment without the need for collateral, which will further help the sector spur the industry’s growth. This initiative is expected to alleviate financial barriers for MSMEs, fostering increased productivity and technological advancement across the sector, which is essential for the country’s overall economic growth.”

Gurjodhpal Singh, CEO, Tide in India

“While the budget reflects a commendable focus on employment, skilling, and women, it is important to recognise that many of the policies will need a robust implementation. The increase in Mudra loan limits from ₹10 lakh to ₹20 lakh is a positive step for entrepreneurs, yet the on-ground implementation of the government’s policy directive needs stronger adoption at the grassroots level.

The government’s commitment to enhancing women’s participation in the workforce through initiatives like working women’s hostels and creches is a welcome development.

The allocation of over ₹3 lakh crore for schemes benefitting women and girls as well as setting up of women-specific skilling programmes to boost women’s participation in the workforce, signals a significant commitment to women-led development. However, there remains ample room for improvement in the execution and scope of these policies.

The introduction of a new assessment model for MSME credit is a step in the right direction, allowing for a more nuanced understanding of credit eligibility that extends beyond traditional metrics. Several fintechs and non-traditional financial institutions have been working on this front for a while now, so a collaboration between government and the fintech ecosystem to facilitate this would be a great post-budget action item.

In sum, while there are positive elements in this budget, there is still room for improvement in terms of the implementation and outcome of these initiatives. The journey toward comprehensive support for all sectors, particularly for women and MSMEs, is ongoing, and we look forward to seeing how these initiatives evolve in the future”.

Mr. Ankit Ratan, Co-founder & CEO at Signzy

“The budget announcement is in line with our expectations of focusing on new credit model for MSMEs. This initiative will enable financial institutions to move beyond traditional credit assessments and enhance financial inclusion for MSMEs. AI & ML technology can be leveraged to analyse alternative data from the digital footprint of the MSMEs. It will help the financial institutions to make informed decision and help MSMEs to become part of formal economy.  Public sector banks will need to develop a new credit assessment model that leverages the digital footprints of MSMEs in the economy. Additionally, the budget provided various forms of support to MSMEs, such as increasing Mudra loan limits and offering assistance during periods of stress. These measures are designed to ensure that MSMEs, the backbone of our economy, receive the necessary support to thrive and contribute to India’s vision of becoming a ‘Vikshit Bharat’.

We also commend the government’s continuous focus on promoting and supporting the startup ecosystem. The proposal to abolish the ‘Angel tax’ is a significant step towards encouraging investment in the sector. This move will attract both international and domestic investors, promoting innovation and growth within the startup community.”

Mr. Sanjay Kumar Sinha, Chaitanya Projects Consultancy

“We welcome the visionary budget presented by the Finance Minister Nirmala Sitharaman. The budget deeply resonates with the spirit of Viksit Bharat. The inclusion of infrastructure and urban development in the government’s nine priorities will help the country achieve a collective dream of USD 5 trillion economy.  Government’s strong fiscal support of Rs 11,11, 111 crore will have a positive cascading effect on different sectors. The Rs 26,000-cr outlay for the state of Bihar that will boost roads and highways connectivity, while Rs 2.66 lakh crore allocation for rural development, including rural infrastructure will give impetus to rural economy. The budget also gives thrust is to construct Plug and Play Industrial Parks across 100 Indian cities and 12 Industrial Parks under the Industrial Corridor, keeping in mind needs of the manufacturing sector.”

Mr. Sorab Agarwal, Executive Director, Action Construction Equipment Ltd.

“The Union Budget’s substantial allocation of over Rs 11.11 lakh crores, nearly 3.4 per cent of India’s GDP, for infrastructure is a clear catalyst for accelerated growth. This, coupled with the significant push of Rs 2.2 lakh crore towards affordable housing under PMAY-Urban, creates a robust pipeline for the construction and allied sectors. We anticipate increased business opportunities and a positive impact on employment generation. Moreover, the budget’s focus on the MSME sector, with a proposed allocation of over Rs 22,000 crore, is a welcome move. This will foster innovation, job creation, and strengthen the economy. The budget’s overall direction aligns with the government’s vision of a ‘Viksit Bharat’ by 2047, providing a strong foundation for sustainable and inclusive development.”

Anuraag Saxena, CEO, E-Gaming Federation

“The Budget 2025’s strong emphasis on youth empowerment, job creation, and employment-linked skilling is optimistic. Over the next five years, the Hon’ble FM has devised a plan to provide employment possibilities for almost 4.1 crore youth. The allocation of Rs 1.48 lakh crore for employment and education to skill 20 lakh youth over five years is another noteworthy milestone. Jobs are the primary driver of economic growth, and putting new initiatives and allocations into practice would not only improve the employment situation but also have a significant impact on developing a trained labor force for all industries, including the online skill gaming. The sunrise industry has consistently played a pivotal role in providing opportunities to Bharat’s talented young individuals. We welcome today’s budget as a positive development. The online gaming industry is excited to partner with the government towards a Vikasit Bharat by becoming a center for global gaming innovation.”

Yogesh Mudras, Managing Director, Informa Markets in India

“We applaud the Union Budget’s focus on the new credit guarantee scheme for MSMEs in the manufacturing sector, which aims to facilitate term loans for acquiring machinery and equipment. This initiative is highly valuable, as it provides essential collateral-free loans, significantly improving credit accessibility for MSMEs. Many new and small businesses struggle to secure funding due to insufficient collateral, and this scheme effectively addresses that challenge, opening doors to critical financial resources for their growth. At Informa Markets in India, we are particularly encouraged by this measure, given that a significant portion of our exhibitors come from the MSME sector. This new credit scheme will directly benefit many of our participating businesses, supporting their expansion and innovation. By fostering entrepreneurship and aiding the establishment of new ventures, the government is taking a commendable step. We are confident that this initiative will positively impact the sustainability and development of businesses across the country, driving growth and resilience within the MSME sector.”