A Breakdown of Budget 2024-25: A Renewed Focus on Building the Resilience of the MSME Sector in India 

The Union Budget 2024–25 has achieved a fine balance between holistic growth and all-inclusive welfare.  

This is a real booster budget, as it is focused on strengthening vulnerable sections of the economy—the poor, women, youth, and farmers. The Honourable Finance Minister, Nirmala Sitharaman, has emphasised that the Indian economy continues to be a shining example globally as the inflation rate is low and moving towards the 4% target.

“Turning attention to the full year and beyond, in this budget, we particularly focus on employment, skilling, MSMEs, and the middle class. I am happy to announce the prime minister’s package of 5 schemes and initiatives to facilitate employment, skilling and other opportunities for 4.1 crore youth over 5-year period with a central outlay of RS. 2 lakh crores.”– FM Nirmala Sitharaman

In pursuit of ‘Viksit Bharat,’ the budget highlights the need to provide ample opportunities in employment, skilling, and for the development of Micro, Small, and Medium Enterprises (MSMEs) and the middle class.

The government’s special attention to MSMEs and manufacturing units

The budget’s elaborate emphasis on strengthening the resilience of the MSME sector is extremely encouraging. This is a welcome development and sets a promising tone for the country’s growth trajectory, fulfilling the overarching vision of an all-inclusive economy.

The Ministry of Micro, Small and Medium Enterprises shared that the Prime Minister’s Employment Generation Programme (PMEGP) has aided in generating employment for nearly 8 million people till July 2024 and provided subsidies worth more than Rs 25,263.33 crore. 

The government has introduced financing measures and regulatory changes to make affordable credit more readily available for MSMEs to scale up and compete globally. We’re pleased to see the roll-out of a new credit assessment model for MSMEs, where public sector banks are expected to build in-house capabilities to assess the sector for credit based on the digital footprint of these businesses. Digital footprint-based credit models enhance access to credit and approval rates for MSMEs.

• Credit guarantee schemes for MSMEs in the manufacturing sector. 

On the credit guarantee schemes for MSMEs in manufacturing, the Finance Minister stated that the government will introduce a scheme that will facilitate MSMEs to secure term loans for machinery and equipment purchases without needing collateral or a guarantee. In addition to this, a dedicated self-financing guarantee fund will offer a guarantee cover of up to Rs. 100 crore for each borrower, with the potential for higher loan amounts. 

• The continuation of bank credit to MSMEs.  

The government also promises to facilitate the continuation of bank credit to MSMEs during their stress periods and has proposed for the limit of Mudra loans to be increased from 10 lakhs to 20 lakhs. 

• Onboarding MSMEs to the TReDS platforms. 

In a bid to bring more public and private enterprises onto the TReDS platform and enable even MSME suppliers to benefit from it, the mandatory onboarding threshold for buyers on the TReDS platform has been lowered from INR 500 crore to INR 250 crore.

• Other notable measures aimed at accelerating MSME growth 
  • To further bolster the MSMEs in the country, the government has promised support for 50 multi-product food irradiation units in the MSMEs sector. 
  • Additionally, E-commerce export hubs will be set up to facilitate trade and export under one roof and empower MSMEs and local artisans to sell their products in international markets. 
  • SIDBI is set to open 24 new branches to serve the growing MSME clusters in the country. 

Energy security is a key priority

From solar to thermal power, the Union Budget has proposed plans to boost multiple segments within the energy sector.

Further to the announcement in the interim budget, PM Surya Ghar Muft Bijli Yojana has generated an impressive response, with more than 1.28 crore registrations and 14 lakh applications. With an objective to further boost the renewable sector, nuclear energy will form a very significant part of the energy mix for Viksit Bharat. The government also announced a provision of INR1.52 lakh crore for agriculture and allied sectors.

Packages to ​​facilitate employment, skilling, and other opportunities

We also applaud the government’s move to introduce five schemes and to facilitate employment and skilling for 4.1 crore youth over five years with a central outlay of INR 2 lakh crore. A new scheme will be launched to offer internship opportunities in 500 top companies to one crore youth in five years. The government also plans to provide a one-month wage to everyone who is newly entering the workforce in various formal sectors. 

By proposing to abolish the angel tax for all classes of investors, the government gives a huge fillip to aspiring entrepreneurs and the overall startup ecosystem to succeed. The corporate tax rate on foreign companies will also be reduced to 35%. 

Fast-tracking India’s growth trajectory

The government has laid out a roadmap designed to pursue nine priorities (which include agriculture, employment, inclusive development, and sectors like energy and infrastructure) for generating opportunities for India and propelling the economy on a high growth trajectory. 

By providing much-needed relief to the country’s booming MSME sector, Union Budget 2024-25 has reiterated how this sector has been a vital pillar of growth for our economy. This special focus on MSMEs and the rural segment augurs well for the digital financial inclusion framework, and we can expect it to gain traction in the future.

Think Working Capital… Think CredAble!