Budget 2025: Boosting Infrastructure and Agriculture

According to a report by the State Bank of India, the central government may announce innovative measures to boost infrastructure, agriculture, MSME and other important sectors in its upcoming budget 2025. These measures may include alternative financing sources, targeted production-linked incentive (PLI) schemes, and strategies to strengthen India's green economy and disaster management.

It said that "the government can introduce alternative sources of financing for infrastructure projects, which are generally cheaper than debt markets for better-rated borrowers such as tax-free bonds, tax payment bonds, etc." This approach can reduce financing costs and boost infrastructure development.

The report suggested the creation of an all-encompassing Credit Guarantee Fund Trust for the Agriculture and Allied Sectors (CGFTAAS). It will act as a credit accelerator by ensuring coverage for new agricultural credits, including Agriculture Value Chain Financing (AVCF). The report also recommended the implementation of the 2021 Report on the Agricultural Value Chain to improve the efficiency of the sector.

The housing sector may see a change in the definition of priority sector lending (PSL). Projects costing Rs 65 lakh in six metro cities and Rs 50 lakh in other areas can now qualify as affordable housing under the PSL, which is an amendment to the 2018 norms. For MSMEs, the report recommended the introduction of PLI for key sectors such as textiles, apparel, handicrafts, food processing, leather, electronics, and auto components.

It was also suggested to increase the allocation for the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) and encourage banks to expand MSME credit coverage.

The budget may also focus on sustainability with the introduction of a green classification to channel funds towards India's climate commitments under Nationally Determined Contributions (NDCs) submitted to the UNFCCC.