Government’s Bold Step Towards Inclusive Growth and Economic Empowerment
In a landmark move during the Union Budget 2025, Finance Minister Nirmala Sitharaman introduced a new scheme offering term loans of up to Rs 2 crore for first-time entrepreneurs, with a focus on women and individuals from Scheduled Caste (SC) and Scheduled Tribe (ST) communities. The initiative aims to empower 500,000 first-time borrowers over the next five years, marking a significant step toward India’s “Viksit Bharat” vision—one that seeks a nation free of poverty and thriving with economic opportunities.
A Step Towards Financial Inclusion
The new scheme reflects the government’s commitment to bridging the financial gap for marginalized entrepreneurs, who often face significant barriers in securing funding. Women, in particular, struggle with limited access to credit, professional networks, and business support, while SC/ST entrepreneurs continue to face structural and historical challenges in obtaining capital. By easing financial constraints, the initiative aims to drive business expansion, employment generation, and economic growth.
Sitharaman emphasized that the availability of these funds will not only help entrepreneurs establish and scale their ventures but will also contribute to the nation’s broader economic landscape. The scheme has the potential to be a turning point for those previously unable to access traditional bank loans due to stringent requirements and lack of collateral.
Industry Experts Welcome the Move
Legal and financial professionals have praised the initiative but stress that proper execution will be crucial.
- Ketan Mukhija, Senior Partner at Burgeon Law, hailed the scheme as a positive step toward financial inclusivity but urged the government to incorporate mentorship programs and skill development initiatives for long-term success.
- Prateek Bansal, Partner at White & Brief Advocates and Solicitors, cautioned that strong financial planning would be needed to prevent a rise in nonperforming assets.
- Nilesh Tribhuvan, Managing Partner at White & Brief Advocates and Solicitors, compared the scheme to transformative moments in India’s economic history, such as the microfinance and Green Revolutions. He believes it could reshape India’s entrepreneurial landscape by fostering a surge of women-led businesses and encouraging regional development.
Bridging Gender Gaps in Business
Studies consistently highlight the necessity of such programs. Despite progress, gender disparities persist in India’s financial ecosystem:
- 90% of female entrepreneurs in India have never borrowed from a formal financial institution, according to a 2022 International Finance Corporation (IFC) report.
- During the 2020 lockdown, 72% of women-owned businesses had no financial reserves, compared to 53% of male-owned enterprises.
- A Google-Bain study found that nearly 50% of women entrepreneurs lack access to professional networks, limiting their ability to secure mentorship and funding.
Additionally, societal norms and family responsibilities continue to hinder women’s business ambitions, making targeted financial interventions critical to achieving gender parity in entrepreneurship.
Existing Government Programs for Entrepreneurs
While this new scheme has taken center stage, India already has several programs supporting women and SC/ST entrepreneurs:
- Mudra Yojana – Offers collateral-free loans up to Rs 10 lakh with preferential interest rates for women.
- Stand-Up India – Provides bank loans up to Rs 1 crore to at least one SC/ST borrower and one woman per branch to establish new businesses.
- PM Employment Generation Programme (PMEGP) – Assists micro-enterprises with funding and training.
- Economic Empowerment of Women Enterprises and Startups – Focuses on incubation and acceleration support for women-led businesses in select states.
A Bold Leap for India’s Entrepreneurial Future
With an ambitious goal of empowering 500,000 first-time entrepreneurs, the new Rs 2 crore loan scheme represents a monumental push for inclusive economic development. By ensuring financial support for marginalized business owners, the initiative could unlock a new era of innovation, employment, and financial independence.
However, effective implementation, mentorship support, and financial safeguards will be essential to maximize its impact. If executed well, this initiative has the potential to redefine India’s entrepreneurial landscape and fuel the nation’s journey toward becoming a global economic powerhouse.