Finance Minister Launches Mutual Credit Guarantee Scheme for MSMEs and Highlights Key Budget Initiatives

Mumbai: Union Finance and Corporate Affairs Minister Nirmala Sitharaman today launched the Mutual Credit Guarantee Scheme for MSMEs (MCGS – MSME) to facilitate loans of up to Rs. 100 crore for machinery and equipment purchases without collateral. This initiative follows the Union Budget 2024-25 announcement and was unveiled at the post-budget stakeholders’ interaction in Mumbai.

Sitharaman also virtually inaugurated Mumbai’s first ‘Sachal Aaykar Seva Kendra,’ operational at Navy Nagar Colaba on February 18-19, 2025, to enhance digital service access, provide grievance redressal assistance, and promote tax awareness.

Additionally, the Finance Minister handed over ceremonial keys to homeowners benefitting from the SWAMIH Investment Fund of SBI Ventures Ltd. Several high-ranking officials, including Union MoS (Finance) Shri Pankaj Chaudhary and senior secretaries from various financial departments, were present at the event.

Key Highlights from Budget 2025-26

Increased Capital Expenditure

The government’s post-COVID capital and asset-building strategy continues with a 10.2% increase in capital expenditure in Budget 2025-26, reaching Rs. 16 lakh crore. This investment is aimed at infrastructure development to drive economic growth.

Boost to R&D and STEM

The government has intensified support for research and development, particularly in STEM fields, while encouraging private sector participation. Key reforms in manufacturing, Ease of Doing Business (EODB), and social infrastructure were also highlighted.

Fiscal Consolidation & Reduction of Fiscal Deficit

Sitharaman reiterated the government’s commitment to reducing the fiscal deficit below 4.5% and bringing the Debt-to-GDP ratio down to 50% by FY 2030-31. The government remains focused on responsible borrowing for capital asset creation without compromising on education, healthcare, and infrastructure investments.

Boosting Consumption, Saving, and Investment

The Budget emphasizes boosting consumption through tax concessions, encouraging taxpayers to spend, save, and invest while maintaining economic momentum.

New Income Tax Act

The outdated Income Tax Act, 1961, is set to be replaced with a streamlined version currently under review by the Select Committee. The revised act consolidates provisions, reducing sections from 800 to 500, simplifying language, and enhancing transparency.

Opening Up New Sectors for Investment

The government has opened up investments in space, energy, nuclear energy, and critical minerals, with MoUs signed for the import of essential minerals. A full exemption of Customs Duties on 25 critical minerals has been announced to boost industries such as space, defense, telecommunications, high-tech electronics, and renewable energy.

Education and Health Reforms

Higher education accessibility is being enhanced through expanded student loan support. The insurance sector’s participation cap has been raised to 100% from 74%, ensuring broader market engagement with necessary safeguards.

Agricultural Productivity with PM Dhan Dhaanya Krishi Yojana

The newly introduced PM Dhan Dhaanya Krishi Yojana aims to enhance agricultural productivity across 100 low-output districts, benefiting 1.7 crore farmers. The initiative focuses on irrigation, long-term and short-term credit, and improved food security.

These initiatives reaffirm the government’s commitment to economic stability, innovation, and inclusive growth, positioning India on a strong trajectory toward development and self-reliance.