By TIOL News Service

MUMBAI, FEB 18, 2025: UNION Finance and Corporate Affairs Minister, Nirmala Sitharaman, launched the Mutual Credit Guarantee Scheme for MSMEs (MCGS - MSME) for facilitating loans upto Rs. 100 crore to MSMEs for purchase of machinery or equipment without collateral, in pursuance of the Union Budget 2024-25 announcement, at the post-budget stakeholders' interaction in Mumbai, yesterday.

The Union Minister also virtually inaugurated the first. Sachal Aaykar Seva Kendra' at Mumbai, to be operational in Navy Nagar Colaba from 18th and 19th February, 2025, and is designed to facilitate access to digital services, provide assistance for grievance redressal and to promote tax awareness.

At the same function, Sitharaman also handed over ceremonial keys to the home owners benefitted by the SWAMIH Investment Fund of SBI Ventures Ltd. Union MoS (Finance) Pankaj Chaudhary, Secretary (Finance) Tuhin Kanta Pandey, Secretary (DEA) Ajay Seth, Secretary (Dept. of Expenditure) Dr. Manoj Govil, Secretary (Dept. of Financial Services) M. Nagaraju, Secretary (DIPAM) Arunish Chawla, CBDT Chairman Ravi Agrawal and CBIC Chairman Sanjay Kr. Agarwal were also present on the occasion.

In her keynote address, Sitharaman stated that Government continues its post-COVID capital and asset-building strategy, with increased allocations for capital expenditure to drive infrastructure development. The Finance Minister outlined the major takeaways from the Budget 2025-26, emphasizing economic growth, responsible fiscal management, and key structural reforms aimed at realising the vision of Viksit Bharat.

Increased Capital Expenditure

Government's emphasis post Covid for public expenditure in asset building continues and hence, capex is 10.2 percent more in Budget 2025-26 than last budget (Vote-on-account 2024-25).  The capex budget has been significantly increased and stands at around Rs. 16 lakh crore, stated the Finance Minister.

Boost to R& D and STEM

Highlighting the importance of research and development, the Finance Minister noted that significant steps have been taken to support R&D, especially in STEM fields, with private sector participation being encouraged. She also reaffirmed the Government's commitment to ongoing reforms in manufacturing, Ease of Doing Business (EODB), and social infrastructure to strengthen economic foundations.

Focus on Fiscal Consolidation, Reduction of Fiscal Deficit 

The Government remains steadfast in its commitment to fiscal consolidation, with a clear roadmap to bring the fiscal deficit below 4.5%. Borrowings are focused on capital asset creation, ensuring sustainable economic growth. She assured, "We are on track to bring the Debt-to-GDP ratio down to 50% by FY 2030-31. This reflects our disciplined approach towards financial stability without compromising on education, healthcare, or infrastructure investments."

Boosting Consumption, Saving and Investment by the citizens

"This Budget focuses on boosting consumption while ensuring economic momentum. By providing tax concessions, we are enabling taxpayers to spend, save and invest, giving them the freedom to make financial decisions that best suit their needs."

New I-T Act

The Income Tax Act, 1961, is set to be replaced by the new law which is currently under review by the Select Committee. With 60,000 inputs received, it is one of the most comprehensive tax reform exercises undertaken and reflects the spirit of Jan-bhagidaari. The new law will reduce complexity by consolidating provisions, reducing the number of sections from 800 to 500, and simplifying language for better interpretation. "FAQs The Finance Minister praised the CBDT for completing this monumental task within six months, stating, "This is a landmark effort towards simplification and transparency in taxation. Our aim is to make compliance easier and more efficient for every taxpayer."

Opening up newer sectors for investments - Space, Energy, Nuclear Energy, Critical Minerals

Newer sectors such as space and nuclear energy have been opened up for investments, ensuring global competitiveness and technological advancement. Stressing the importance of energy security, she remarked, "With the rise in data centers and industrial expansion, our energy sector must scale accordingly", stated the Finance Minister. The MSME Loan Guarantee scheme now extends to critical minerals, with the Government signing MoUs with multiple countries for import of important critical minerals. Additionally, full exemption of Customs Duties on 25 Critical Minerals have been announced in the union budget. This will benefit sectors like space, defence, telecommunications, high-tech electronics, nuclear energy and renewable energy, where these rare earth minerals are critical.

Education and Health

Education and health remain key priorities, with more universities being considered for student loan support to enhance accessibility to higher education. The insurance sector has been opened up with necessary safeguards, ensuring broader participation while maintaining financial security. Union Budget 2025 increased the sectoral cap of insurance sector to 100% from 74%.

PM Dhan Dhaanya Krishi Yojana for better agricultural productivity

Addressing food security, the Finance Minister highlighted the introduction of PM Dhan Dhaanya Krishi Yojana, which aims to improve agricultural productivity across 100 districts known for low agricultural output. This programme will help 1.7 crore farmers to enhance agricultural productivity, improve irrigation facilities and facilitate long-term and short-term credit "Strengthening food security in rural India is paramount, and this initiative will uplift our farmers and boost productivity where it is needed most," she said.

The interaction with stakeholders was followed by a press conference, the proceedings of which may be accessed here.