Fiscal prudence coupled with sustained RAM focus

Ajay Kumar Srivastava,  MD&CEO, Indian Overseas Bank

Balancing economic ambition with inclusion, the Union Budget 2026 has laid the framework for transforming ambition into achievement across all sections of society and industry. Amongst the various sectors of Indian industry, the Rural, Agriculture and MSME (RAM) sector has received particular focus, with several reforms announced towards accelerating economic progress and building long-term resilience to sustain India’s growth momentum.

Facilitating MSME modernisation

As part of its concerted push to scale manufacturing across key frontier sectors, the FM outlined the government’s vision of creating champion MSMEs. Towards this end, the Budget has provisioned Rs 10,000 crores for a dedicated SME growth fund that will incentivise MSMEs to pursue technology adoption and business expansion opportunities both in India and abroad. This fund is not only a formal recognition of the importance of MSMEs in powering broad-based economic expansion but has also been followed up with an additional 2,000 crore support towards enhancing access to risk capital.

Combining this fiscal support with key enhancements to the TReDS (Trade Receivables Discounting System) digital platform, including classifying TReDS receivables as asset-backed securities, should ease working capital challenges and boost access to cheaper and quick financing options. What’s more, the move to link TReDS with the GeM portal should streamline purchases and help manufacturing units in expanding their business share from CPSEs; in turn augmenting a key procurement channel for India’s burgeoning MSME sector.

Fortifying agricultural diversity

With a special focus on small farmers and other individuals involved in fisheries as well as animal husbandry, the Union Budget 2026 has announced incremental measures to strengthen India’s rural economy. Notable examples include a dedicated credit-linked subsidy programme to support animal husbandry, encourage the creation of livestock farmer producer organisations and bolster the fisheries value chain along India’s coastal regions.

Additionally, the focus on uplifting both the production and processing of high-value crops should increase rural household incomes and cement India’s status as the leading global sourcing hub by 2030. Crops such as coconut, sandalwood, cashew, agar wood as well as nuts such as walnuts & pine nuts have been specifically identified; with special coconut and sandalwood production schemes in the offing to support new plantations and enhance post-harvest processing while making India self-reliant in cashew and cocoa production. These measures along with improved access to Bharat-VISTAAR, a multi-lingual AI tool that will enhance farm productivity through advisory support, should revitalize India’s rural economy by leaps and bounds.

Complementing the above measures is the plan to support reform-led growth by creating a high-level committee to review the banking sector; further helping align the industry with the next stage of growth and propelling India’s march towards new frontiers in the foreseeable future.

Published on February 1, 2026