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India, New Delhi, January 27: According to a State Bank of India research, the Union government may unveil creative initiatives to support infrastructure, agriculture, MSMEs, and other vital sectors in its forthcoming Budget 2025.

Alternative financing sources, focused production-linked incentive (PLI) programs, and tactics to improve India’s green economy and disaster management are a few examples of these actions.

It said that the “Government may introduce alternate sources of funding to infrastructure projects, which are generally cheaper than loan markets for better rated borrowers like Tax Free Bonds, Tax Paid Bonds, etc.” This strategy may increase infrastructure development and reduce finance costs.

The research recommended the establishment of an omnibus Credit Guarantee Fund Trust for Agri & Allied Sectors (CGFTAAS) in the agricultural sector. By guaranteeing coverage for new agricultural loans, such as Agri Value Chain Financing (AVCF), this would serve as a credit accelerator.

To increase the sector’s efficiency, it also suggested putting the 2021 report on the agricultural value chain into practice.

The definition of Priority Sector Lending (PSL) may vary for the housing industry. A change from the 2018 criterion, projects costing Rs 65 lakh in six metro areas and Rs 50 lakh in other areas may now be considered affordable housing under PSL.

According to the research, MSMEs should implement PLIs for important industries including clothing, electronics, leather, handicrafts, food processing, textiles, and auto parts.

Additionally, it recommended encouraging banks to broaden the scope of MSME loan coverage and boosting the amount allotted to the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE).

With the implementation of a green taxonomy to direct funding towards India’s climate pledges under the Nationally Determined Contributions (NDC) submitted to the UNFCCC, the budget may also emphasize sustainability.

The paper also suggests creating a Disaster Pool to control the risks associated with natural catastrophes. This public-private insurance program, which is based on the current Nuclear and Terrorism Pools, might lessen monetary losses caused by disasters.

Collaborations with international organizations and the creation of abroad centers for Indian colleges to draw in foreign students might bring about improvements in the education industry. This action is in line with India’s objective of developing into a knowledge-based economy.

According to the paper, these suggestions are meant to encourage resilience, sustainability, and economic development in important areas.