The Union Budget 2025 has declared that in reaching the destination of Viksit Bharat by 2047, reforms will act as fuel and inclusivity will be the guiding spirit. The reforms have focused on labour-intensive sectors and are towards boosting productivity. This is significant as in its growth journey, India directly moved from agriculture to services given its software boom in the eighties. It had skipped the manufacturing segment. With as many as 7-8 million employable youth entering the job market every year, the government has rightly been focusing on manufacturing sector for the past couple of years. Through its measures, the budget recognizes that it is the people that make India a country and not just its land.
In particular, the measures announced for agriculture sector, the budget through the Dhan Dhanya Krishi Yojana intends to develop 100 districts that will help 17 million farmers. With mission for cotton productivity, board to improve production, processing, value addition and marketing of makhana which has of late gained much popularity and a mission for high-yielding seeds, the government has sought to raise agriculture productivity. This will be supported through increased short-term credit of up to ₹5 lakh through Kisan Credit Cards for 77 million farmers, fishermen and dairy farmers.
Banks here will have to play a crucial role in ensuring that the objectives are delivered in a timely manner. Banks already offer electronic Kisan Credit Cards today, which are UPI enabled. Technology can further facilitate KYC and other processes and extend the loans to farmers.
The budget has recognized MSMEs, investments and exports as three other engines for achieving the destination of Viksit Bharat. With 36% contribution in manufacturing and 45% in exports, MSMEs have the potential to turn India into a manufacturing hub for the world. To help them achieve higher efficiencies of scale, their technological upgradation and give them better access to capital, the budget has enhanced the investment limits for classification of all MSMEs to 2.5 times and turnover limits to two times. The higher classification limits would enable the MSMEs to grow and yet retain their incentives. The increase in the threshold limits for their classification will also give them the confidence to grow and to generate employment for our youth.
Further, the enhanced credit guarantee cover will give them access to higher credit. The enhancement in credit guarantee will itself give an additional credit of Rs. 1.5 trillion in the next five years to MSMEs. Banks will have more funds to lend as the government will put more money in the hands of citizens by rationalizing tax slabs. While some money will go towards consumption, which also will boost production, a part of the money will definitely go towards savings which banks would be able to further lend. To further support MSMEs through credit, the budget has announced customized credit cards for micro enterprises to provide term loans upto Rs. 5 lakh to first time entrepreneurs, including women, scheduled castes and scheduled tribes. Banks, with the support of financial technology, are well poised to take this business opportunity.
Setting up of BharatTradeNet, a digital public infrastructure for international trade, will be a unified platform for trade documentation and financing solution. The platform will help Indian manufacturing sector and businesses to easily integrate with the global supply chains. Exports Promotion Mission with sectoral and ministerial targets will facilitate easy access to export credit, cross border factoring support and support to MSMEs to tackle non-tariff measures in overseas market. If implemented as it is envisioned, this measure can indeed transform ‘make in India for the world’ slogan into a reality.
The most important measure announced in the budget, however, is to undertake regulatory reforms to support manufacturing by focusing on easing and reducing the cost of doing business. It intends to bring ‘light touch regulatory framework based on principles and trust to unleash productivity and employment’. While we await the income tax bill to be presented next week to see how the government will do this, a peek into it is already made available in the budget which talks about giving more time to file tax returns and decriminalization of more than 100 provisions of various laws. Such an approach, based on trust, will definitely boost private investments and also bring in higher foreign investments and encourage quick decision making.
The path to making India a developed nation by 2047 is indeed a long and arduous one. But by focusing on India’s advantage - its people - Budget 2025 has given us the right direction. Now let the intentions be translated into implementation so that we move on that path easily and reach our destination before time.
Prashant Kumar is managing director & CEO with Yes Bank.
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