Lok Sabha Question No. 2385 (UNSTARRED), answered on 2025-12-15
Subject: Fiscal Policy to Boost Economic Growth
Ministry: FINANCE
Asked by: Shri Anup Sanjay Dhotre

## 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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