Budget 2025's top priorities: Farmers, small businesses, consumption, and jobs

Finance minister Nirmala Sitharaman is likely to announce incentives for farmers, easy credit and other sops for micro, small and medium enterprises (MSMEs), measures to step up household consumption and skilling initiatives in the budget, according to two people familiar with the discussions in the government. The emphasis on these areas is expected to advance the government's inclusive growth agenda, they said.

Extensive discussions are on to nail the specific measures and budget allocations, with some of the tailored steps to be crystalized over the next few days, said one of the people quoted above.

Sitharaman’s eighth and the second full budget of the NDA government’s third term in office has identified these priorities when growth is expected to moderate to 6.4% in FY25 after an average of 8.3% in the three preceding financial years, having recovered from the first wave of the pandemic in FY21. The finance minister's proposals will be closely watched amid global uncertainties, including looming tariffs under the second term of US president-elect Donald Trump.

Measures to boost household consumption, which accounts for more than half of India’s gross domestic product (GDP) and is the economy’s biggest growth engine, is expected to be a highlight of the budget. There is no clarity on the specific measures on boosting consumption as of now.

Industry body Confederation of Indian Industry (CII) had proposed cutting excise duty on auto fuels to improve disposable incomes, lowering tax rate on personal income up to ₹20 lakh, stepping up guaranteed rural job wages, social transfers to farmers and subsidy for building houses.

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The budget is also expected to announce measures on skilling, research and job creation, especially in areas related to AI, the first person quoted above said.

AI and other technologies are making businesses more efficient, reducing their manpower requirement. And experts across industries have suggested stepping up AI training.

Farm incentives

The budget will also focus on value-added crops including fruits, vegetables and unique horticultural products to boost farmers' incomes, according to the second person quoted earlier. Measures are likely to enhance investment in technology, improve production methods, develop marketing infrastructure and reduce post-harvest losses, the person said.

The agriculture sector supports 42.3% of the population and contributes 18.2% of the GDP.

Initiatives to ensure that farmers receive quality agricultural inputs including high-grade seeds to improve yields and overall productivity are also likely. “These measures are expected to strengthen the agriculture sector by addressing critical aspects such as input quality, marketing efficiency, and value addition," said the person.

Budget is also likely to announce steps to help farmers move up the crop value chain.

“Given that India has a significant number of farmers with small landholdings, it is essential for them to transition from focusing solely on staple crops like rice, wheat, millets, pulses, and oilseeds to high-value agriculture," the second person quoted earlier said. “This includes cultivating fruits and vegetables and actively engaging in fisheries, poultry, and dairy farming."

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In ongoing FY25, the ministry of agriculture is expected to spend ₹1.36 trillion, including an additional ₹13,407 crore for which Parliament nod was secured in January, showing a more than 16% jump in the annual spending from the previous year.

Those involved in the farm sector have been pitching for incentives.

“The focus of the upcoming budget should be on increasing agricultural production and ensuring fair prices by targeting specific export markets," said Anurag Shrivastava, founder of farm-focused startup Kisaan Mitra. “With a strong emphasis on rural and agriculture-based initiatives, the objective is to position agriculture as a significant contributor to India’s growth story, reflecting its historical roots as an agrarian economy."

“This approach aims to enhance the sector's productivity, improve farmers' incomes, and integrate Indian agriculture into the global supply chain more effectively," said Shrivastava.

MSME boost

Budget is also expected to announce steps to support small businesses, given their importance in value addition in the manufacturing sector and exports, in addition to job creation in both urban and rural areas, said the first person quoted above.

MSMEs are looking forward to collateral-free loans up to ₹15 crore, according to Chandrakant Salunkhe, president, SME Chamber of India and Federation of Indian SME Associations.

“Many MSMEs are struggling because of not getting their receivables from large corporations on time. Secondly, small business owners often rely on their enterprises for emergency needs, like healthcare, as they do not draw regular salaries like corporate employees," said Salunkhe. However, banks frequently allege fund diversion when small businesses default, he said.

Salunkhe suggested that threshold for assessing a non-performing asset for wilful default should be raised from ₹25 lakh to ₹5 crore and promoters of small businesses be given a hearing before any decision on their classification as wilful default. The government should enable greater access to trade finance and market development, he said.

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Ayush Gupta, India business head at Khushi Ram Behari Lal Ltd (KRBL), a basmati exporter, suggested targeted incentives for upgrading rice mills with energy-efficient technologies to boost productivity, reduce waste, and enhance output quality.

“The focus should be on developing infrastructure to utilize by-products like rice husk for ethanol production, which aligns with energy goals, fostering synergies between agriculture and renewable energy while creating new revenue opportunities," said Gupta.