/indianstartupnews/media/media_files/2025/01/06/Ks2oGZyn3gmmnZwAZA84.jpg)
In a major announcement during the Union Budget 2025, Finance Minister Nirmala Sitharaman unveiled a new scheme that will offer term loans of up to Rs 2 crore for first-time entrepreneurs.
The program is geared toward women and people from Scheduled Caste (SC) and Scheduled Tribe (ST) communities, and it aims to help 500,000 first-time borrowers over the next five years.
New scheme for inclusive growth
Sitharaman stressed that the goal of the scheme is to support India’s “Viksit Bharat” vision, where the country is free of poverty and strives for high economic prosperity. The plan reflects the government’s efforts to address financial disparities by providing more capital to sections of society that often face challenges in securing loans.
Many women entrepreneurs experience difficulties due to limited access to credit, professional networks, and other resources, while SC/ST business owners also face historic barriers to growth.
The finance minister said the availability of additional funds could help entrepreneurs expand their businesses, generate employment, and contribute to the nation’s overall economic development. Officials believe this measure could be a turning point for those who struggle to obtain traditional bank loans.
Expert opinions and reactions
Legal and financial experts welcomed the scheme but pointed out that strong implementation would be essential. Ketan Mukhija, senior partner at Burgeon Law, called the initiative a commendable step toward bridging the funding gap faced by marginalized groups.
However, he advised the government to include mentorship programs and skill development initiatives to ensure long-term success.
Prateek Bansal, partner for taxation at White & Brief Advocates and Solicitors, added that precautions must be taken to keep nonperforming assets under control when offering these loans.
Some compared the plan to large-scale changes in Indian history, like the microfinance revolution and the Green Revolution.
Nilesh Tribhuvan, managing partner at White & Brief Advocates and Solicitors, said the initiative could reshape India’s entrepreneurial landscape by creating a level playing field for women, SC, and ST entrepreneurs. He believes it can ignite a wave of women-led businesses that will boost regional development, job creation, and inclusive growth.
Addressing gender disparities
Recent studies underline the pressing need for such programs. The World Economic Forum has observed only slight improvements in gender parity in India, with economic status often widening the gap in women’s equality.
A 2022 report by the International Finance Corporation (IFC) found that around 90% of female entrepreneurs in India had never borrowed from a formal financial institution. During the 2020 lockdown, 72% of women-owned enterprises had no financial reserves, compared to 53% of male-owned businesses.
Many women also face limited access to professional networks, which restricts their ability to find mentors and connect with potential investors.
A Google-Bain survey showed that nearly half of women respondents reported a lack of professional support due to exclusion from both formal and informal networks. Societal pressures add to these challenges, as women are often expected to manage family responsibilities alongside their professional roles.
Existing government programs
Although the new scheme has taken center stage, other government initiatives also support women and SC/ST entrepreneurs. Mudra Yojana offers collateral-free loans of up to Rs 10 lakh with lower interest rates for women, while the Stand-Up India scheme provides bank loans of up to Rs 1 crore to at least one SC/ST borrower and one woman per branch for setting up a greenfield business.
The Prime Minister’s Employment Generation Programme (PMEGP) and the Udyam Shakti Portal both provide assistance for new micro-enterprises, skill development, and market research. Another program, Economic Empowerment of Women Enterprises and Startups by Women, offers incubation and acceleration support in selected states.