Finance Minister Nirmala Sitharaman has called for more affordable borrowing costs to support industrial growth and capacity building, while addressing concerns about inflation and the overall economic outlook. Speaking at the 11th SBI Banking and Economics Conclave, Sitharaman highlighted key challenges and government measures aimed at stabilising the economy and supporting businesses, particularly small and medium enterprises (SMEs).
Let's check out the key takeaways from the finance minister's speech...
1. Affordable Borrowing Costs: Sitharaman said that the current high cost of borrowing is “very stressful” for businesses. She urged banks to reduce the interest rates to make borrowings more accessible. She added that there's a need for affordable lending to support expansion and capacity-building of industries.
2. Inflation Management: The finance minister acknowledged the pressure of rising vegetable prices, particularly tomatoes, onions, and potatoes, on inflation. She assured that government initiatives, including enhanced storage facilities and the palm oil mission, are being implemented to manage supply shortages and ease price volatility.
3. Economic Resilience: Sitharaman reassured the public that despite signs of moderation in some economic indicators, India’s economy remains resilient. She attributed this resilience to strong macroeconomic fundamentals, moderating inflation, and fiscal consolidation, and advised against undue concerns over the potential slowdown.
4. Focus on Ethical Banking Practices: The finance minister urged banks to prioritise transparency, ethical practices, and customer-centric approaches, particularly in the context of insurance products. She expressed concern over mis-selling and called for clear communication and better service offerings to build customer trust.
5. Support for MSMEs: Sitharaman outlined ambitious lending targets for the MSME sector, setting Rs 6.12 trillion for FY26 and Rs 7 trillion for FY27. She also urged banks to lend an additional Rs 1.54 trillion in FY25 to support small businesses.
6. Global Market Challenges: The finance minister acknowledged the impact of global market fluctuations, particularly in the import of pulses and edible oils, on domestic prices. She assured that the government is taking steps to address these challenges to protect consumers from rising costs.
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