**Executive Summary**
This document is a response to Unstarred Question No. 2385 in Lok Sabha, dated December 15, 2025, concerning the Government of India's fiscal policies to boost economic growth. The response, delivered by the Minister of State in the Ministry of Finance, outlines various initiatives related to fiscal policies, MSME support, FDI attraction, debt management, and skill development. The document aims to inform stakeholders about the government's strategies for economic expansion and development.
**Key Points / Main Content**
* **Fiscal Policy Measures:**
* Implemented to strengthen economic foundations, including higher public investment in infrastructure.
* Includes income tax exemptions up to ₹12 lakh and GST rate rationalization to boost consumption, savings, and investment.
* Focuses on employment, skill development, innovation, agriculture resilience, human resource development, energy transition, and MSME support.
* **Support for MSMEs and Startups:**
* Government schemes aim to strengthen entrepreneurship and employment generation.
* Key initiatives: Prime Minister's Employment Generation Programme, PM Vishwakarma Scheme, Credit Guarantee Scheme for Micro and Small Enterprises, Entrepreneurship and Skill Development Programme, Micro and Small Enterprises – Cluster Development Programme, Raising and Accelerating MSME Performance, and the MSME Champions Scheme.
* Startup India implements three flagship schemes: Fund of Funds for Startups (FFS), Startup India Seed Fund Scheme (SISFS), and Credit Guarantee Scheme for Startups (CGSS).
* **Foreign Direct Investment (FDI) Initiatives:**
* Implemented investor-friendly FDI policy with most sectors open for 100% FDI under the automatic route (except strategically important sectors).
* Focuses on addressing regulatory barriers, streamlining processes, developing infrastructure, improving logistics, and enhancing the Ease of Doing Business (EoDB).
* **Balancing Growth with Fiscal Prudence:**
* Adopted a capex-led growth strategy to maintain a positive growth-interest rate differential.
* Increased Central Government capital expenditure from ₹4.3 lakh crore in 2020-21 to ₹11.2 lakh crore in 2025-26 (Budget Estimate).
* Aims to reduce the fiscal deficit to 4.4% of GDP in 2025-26 and lower total government debt to around 50% of GDP by 2031.
* **Skill Development Initiatives:**
* Skill India Mission (SIM) provides skill, re-skill, and up-skill training through various schemes.
* Schemes include: Pradhan Mantri Kaushal Vikas Yojana (PMKVY), Jan Shikshan Sansthan (JSS), National Apprenticeship Promotion Scheme (NAPS), Deen Dayal Upadhyaya Grameen Kaushalya Yojana (DDU-GKY), and Craftsman Training Scheme (CTS).
**Impact Analysis**
**MSMEs and Startups**
* **Impact:** Enhanced access to funding, mentoring, and incubation, leading to growth and employment generation.
* **Action Required:** Utilize government schemes to strengthen operations and expand business activities.
**Investors (Domestic and Foreign)**
* **Impact:** Improved investment climate due to streamlined processes, infrastructure development, and tax rationalization.
* **Action Required:** Take advantage of the investor-friendly policies and explore investment opportunities in various sectors.
**Youth of India**
* **Impact:** Enhanced skills and employability through various skill development programs.
* **Action Required:** Participate in skill development programs to acquire industry-relevant skills and contribute to economic expansion.
**General Public**
* **Impact:** Increased household consumption, savings, and investment due to income tax exemptions and GST rate rationalization.
* **Action Required:** Be informed of available government schemes and incentives to increase savings and investments.
Key Entities Referenced
Fiscal Policy: The central subject of the document, detailing measures to boost economic growth.
Skill India Mission (SIM): A government initiative aimed at skill development, re-skilling, and up-skilling the Indian workforce.
MSME: The document discusses supporting MSMEs and startups through various schemes aimed at strengthening entrepreneurship, enabling growth and facilitating employment generation.
Foreign Direct Investment (FDI): The document discusses attracting foreign investment through initiatives like an investor-friendly FDI policy and streamlining regulatory processes.
Prime Minister's Employment Generation Programme: One of the key MSME initiatives to promote employment.
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF ECONOMIC AFFAIRS
LOK SABHA
UNSTARRED QUESTION NO.2385
TO BE ANSWERED ON MONDAY, DECEMBER 15, 2025 / Agrahayana 24, 1947 (Saka)
Fiscal Policy to Boost Economic Growth
2385. Shri Anup Sanjay Dhotre:
Will the Minister of FINANCE be pleased to state:
(a) the fiscal policies implemented recently by the Government to promote economic growth;
(b) the manner in which the Government is supporting MSMEs and startups to generate
employment opportunities;
(c) the steps taken/being taken by the Government to attract foreign direct investment (FDI) in
specific sectors;
(d) the manner in which the Government plan to balance growth with fiscal prudence and debt
management; and
(e) the initiatives which are underway to promote skill development linked to economic
expansion?
ANSWER
THE MINISTER OF STATE IN THE MINISTRY OF FINANCE
(SHRI PANKAJ CHAUDHARY)
(a): The Government has implemented a series of fiscal policy measures to strengthen the
foundations of economic growth. Higher public investment in infrastructure, accompanied by
a calibrated path of fiscal consolidation, has supported demand, expanded productive capacity
and enhanced macroeconomic stability. Additionally, the new income tax exemption for annual
incomes up to ₹12 lakh and the recent GST rate rationalisation measures are expected to boost
household consumption, savings and investment and, in turn, promote economic growth.
Further, initiatives and measures on employment, skill development, innovation, resilience in
agriculture, inclusive human resource development, appropriate energy transition pathways,
and support for micro, small, and medium enterprises are also likely to catalyse sustainable
growth.(b): The Government supports MSMEs and startups through a wide range of schemes aimed
at strengthening entrepreneurship, enabling growth and facilitating employment generation.
Key MSME initiatives include the Prime Minister’s Employment Generation Programme, PM
Vishwakarma Scheme, Credit Guarantee Scheme for Micro and Small Enterprises,
Entrepreneurship and Skill Development Programme, Micro and Small Enterprises – Cluster
Development Programme, Raising and Accelerating MSME Performance, and the MSME
Champions Scheme. These programmes promote employment across manufacturing, services,
trading and women-owned enterprises. Under the Startup India initiative, the Government
implements three flagship schemes, namely, Fund of Funds for Startups (FFS), Startup India
Seed Fund Scheme (SISFS), and Credit Guarantee Scheme for Startups (CGSS), to support
startups across various stages of their business cycle through access to funding, mentoring and
incubation.
(c): To attract more FDI, the Government has put in place an investor-friendly FDI policy,
wherein most sectors, except certain strategically important sectors, are open for 100% FDI
under the automatic route. Further initiatives to attract foreign investment include addressing
regulatory barriers, streamlining processes, developing infrastructure, improving logistics, the
Ease of Doing Business (EoDB), providing an enabling environment for industrial
development through various policy interventions, rationalisation of tax structure, among
others.
(d): The Government has adopted a strategy of capex-led growth to maintain a positive
growth-interest rate differential, thereby ensuring a sustainable government debt-to-GDP ratio
over the medium term. Central Government capital expenditure has increased from Rs 4.3 lakh
crore in 2020-21 to Rs 11.2 lakh crore in 2025-26 (Budget Estimate), and this higher investment
is generating multiplier effects on economic activity. Simultaneously, the Government has set
a clear path to moderate public borrowings by proposing to reduce the fiscal deficit to 4.4 per
cent of GDP in 2025-26 and aims to bring total government debt down to about 50 per cent of
GDP by 2031.
(e): Under the Skill India Mission (SIM), Government of India delivers skill, re-skill and
up-skill training through an extensive network of skill development centres under various
schemes, viz. Pradhan Mantri Kaushal Vikas Yojana (PMKVY), Jan Shikshan
Sansthan (JSS), National Apprenticeship Promotion Scheme (NAPS), Deen Dayal Upadhyaya
Grameen Kaushalya Yojana (DDU‑GKY) and Craftsman
Training Scheme (CTS) through Industrial Training Institutes (ITIs), to all the sections
of the society across the country. The SIM aims at enabling the youth of India to get future
ready and equipped with industry-relevant skills, and in turn contribute to economic expansion.
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