OPINION | Pragmatic budget which resisted the temptation of populism: CS Setty, Chairman, SBI

SBI chairman CS Setty

Let me start by acknowledging that the Union Budget 2026, as expected widely had shown pragmatism in a globally uncertain world. The fact that the Union Budget has stuck to moderate fiscal deficit and fiscal prudence is commendable. We need to appreciate that this Budget has not yielded to populism; it retained fiscal prudence over populism.

Strategic Push for Manufacturing and Job Creation

What is also worth mentioning is that some of the sectors such as semiconductor, electronic manufacturing, rare earth corridors and biopharma have received the required importance in the Union Budget. These are segments which are important in terms of value added manufacturing and they also contribute significantly towards job creation. A lot of importance has also been given to textile segment, both artificial as well as natural fiber segment, which is appreciable.

Strengthening SMEs and Micro Enterprises

The other key highlight was the thrust on small and medium enterprises (SMEs).

The allocation of Rs 10,000 crore towards SME Growth Fund is a very important element which can go a long way in supporting the segment. While we will have to understand the finer nuances of the growth fund, as a measure, I see this step as a very positive one.

SBI Ventures is the Investment Manager of SRI (Self-Reliant India) Fund of Ministry of MSME, which supports micro enterprises. The announcement to extend top up facilities to the tune Rs 2,000 crore to micro enterprises where equity support is required is an extremely positive development.

The TReDS platform which is a bill discounting platform has grown tremendously in the last 3 – 4 years, in terms of the volumes and value of receivables which get discounted. The budget has further augmented and strengthened the TReDS platform. It has introduced CGTMSE (Credit Guarantee Fund Trust for Micro and Small Enterprises) cover for receivables in the TReDS platform which will ensure that receivables discounted by the participants that remain unpaid will be covered by the guarantee. The move to categorize these receivables as asset backed securities will also go a long way in further improving the liquidity of these receivables.

Deepening Financial Markets

I would also like to mention the support extended to corporate bond market. In my view, the budget has targeted at improving the market making framework and municipal bond market, both of which are important and required strengthening because the local bodies constantly struggle to get the financing and funding. These are some good incentives extended.

The budget also mentioned about introducing banking sector reforms, although banking reforms merit elaborate discussions separately. Therefore, we will have to refer to the setting up of a high level committee as charting the way forward for banking sector in that context. Banking sector in general and Public sector banks in particular have been doing extremely well.

Road Ahead for Viksit Bharat

Hence, now is the time to look at what is the way for forward, whether in terms of the technology adoption, financial inclusion, stability of the industry or preparing the sector for any forthcoming cycles. One cannot be oblivious to the fact that the banking sector is a cyclical industry. The objective should be that we plan in good times on how we focus more on preparing the banking sector for Viksit Bharat. One needs to wait for the terms of references and I don’t think it is appropriate to rush on this aspect at this moment.

(CS Setty is Chairman at SBI.)  

Views are personal, and do not represent the stand of this publication.