Union Budget 2025 | Expect major measures to boost financial inclusion: Ajay Pareek, Chief Business Officer, SMFG India Credit

The Union Budget for the upcoming financial year is all set to be presented on February 1, 2025, by Finance Minister Nirmala Sitharaman. According to reports, the Narendra Modi government may consider slashing income tax for individuals earning up to Rs 15 lakhs per annum and extend the tax relief bracket in a bid to provide relief to the middle class and boost consumption.

Ahead of the Budget, Ajay Pareek, Chief Business Officer, SMFG India Credit shared his views that with India heading towards Viksit Bharat, MSMEs and NBFCs had a crucial role to play.

"As India moves towards its twin goals of a $5 trillion economy and Viksit Bharat by 2047, MSMEs and NBFCs will play a crucial role in facilitating these objectives," he said, adding that he expected the upcoming budget to have "major measures to boost financial inclusion such as the creation of an exclusive liquidity window customised for companies financing MSMEs and microfinance schemes."

"Apart from this, Green financing initiatives can offer NBFCs significant opportunities to fund environmentally sustainable projects. Such initiatives will enhance access to affordable funds, leading to enhanced entrepreneurial growth. We also expect provisions in the Budget to include tax reforms, such as deduction at source. NBFCs are subject to 10% TDS on interest payments, creating cash flow constraints, since the sector operates with narrower margins. These measures could boost credit availability and increase access to affordable funds, which is critical to propel economic activity and help India achieve sustainable growth," he further said.

Pareek continued, "Businesses are also increasingly emphasizing the importance of sustainable urbanization. The government’s infra push toward roads, electricity, and industrialization in Tier 2 and Tier 3 cities has significantly bridged the rural-urban divide. This facilitates access to new markets for businesses, spurring local business growth and providing better job opportunities. Consequently, the role of NBFCs in offering formal credit will become even more vital," adding, "digitisation continues to empower NBFCs to disburse loans in a timely, hassle-free manner, minimizing the need for physical paperwork and KYC document verification thus helping NBFCs expand their business to deeper pockets of the country and bringing more of India’s population into the formal financial system."

Union Budget 2025 | Nirmala Sitharaman, who continues to be Finance Minister, will present her record 8th Union Budget this time. While inflation has burnt a hole in the pockets of 'aam janata', reports suggest there might be a tax relief for those making up to Rs 15 lakh per year. Track the latest coverage, live news, in-depth opinions, and analysis only on Deccan Herald. Also follow us on WhatsApp, LinkedIn, X, Facebook, YouTube, and Instagram.