Finance panel urges faster disinvestment, MSME Credit

New Delhi: The Standing Committee on Finance, in its 29th report, tabled in the parliament on Thursday, seeks faster progress on fronts such as disinvestment, MSME lending, job generation, digitisation, and R&D while acknowledging the efforts made by the government to sustain the stability of the macro-economy.

The report provides a nutshell view of the actions taken on earlier recommendations related to the theme “Roadmap for Indian Economic Growth in Light of Global Economic and Geopolitical Circumstances.”

Firstly, the committee has noted that though India is the fastest-growing large economy with a growing real GDP of 6.5 per cent in the FY 2024-25, its per capita Gross National Income grew at a CAGR of 5.1 per cent from 2019 to 2024, which is above the threshold of 2.1 per cent for the upper-middle-income category of countries.

With reference to macroeconomic resilience, it further highlights the trend pursued by the government, aiming to achieve a debt-to-GDP ratio of 50 per cent by 2030-31, compared to a figure of 61.4 per cent for 2020-21.

It is important to recognise a further trend, a decreasing debt-GDP ratio, but also to improve the efficiency of investment by spending public funds in a manner that reduces the incremental capital-output ratio (ICOR), which stood at 4.3 on average after the pandemic.

Regarding the New Public Sector Enterprise (PSE) policy, designed to strengthen the government’s self-reliance initiative, the Committee has also expressed concern over the pace of implementation of this policy. They note: “Not much headway has been made in the implementation of the policy so far… as the proposal for disinvestment of any non-strategic CPSE has not been approved since the guidelines were issued in December 2021.”

While disinvestment is described as a “continuous process,” dependent upon market conditions, in actuality, as stated by the Committee, “prolonged stagnation signals a gap between policy intent and execution. Efforts should be made to fast-track disinvestment by taking specific concrete measures; incentive packages should be reviewed to make reforms more attractive in PSUs.”

Considering the micro, small, and medium enterprises as the backbone of the economy of India, the Committee draws attention to notable initiatives such as the Digital Credit Assessment Model, launched in March 2025; the expansion of the ceiling for the Credit Guarantee Scheme to Rs 10 crores; and onboarding requirements under TReDS. However, the Committee expresses concern about steep interest rates on TReDS, nearly 18 per cent per annum, and encourages the government to re-evaluate such steep interest rates with a view to encouraging more competition among lenders.

On the classification norm for assets, the Committee warns that a one-size-fits-all rule might result in the unintended choking of micro-enterprises. It calls for regular, detailed reviews of repayment stress using data tailored to specific sectors and stresses the need for smoother passage from creditor dependency to equity-led growth through better linking of the Udyam Assist Platform with export promotion and SME capital market efforts.

On employment and skill, the Committee noted the operationalisation of NEP 2020, expansion of PM SHRI schools, NATS 2.0, and the Ayushman Arogya Mandir network at a rate of 1.72 lakh centres. It then adds, “The functional impact of this convergence, however, rests on last-mile convergence.” In a strong Centre-State convergence mechanism, it calls for bringing education, health, and employment programs under one monitoring framework.

Against the growing influence of AI, it is advised that one keep AI-skilling programs dynamic, guided through industry feedback, especially in Tier-2 and Tier-3 areas, and make sure digital access is inclusive.

The Committee also welcomes the Rs 1 Lakh crore Research, Development and Innovation Scheme approved in July 2025, while noting that India’s R&D spend stays at 0.65 per cent of GDP, well below the global average of 2.7 per cent. It commends the two-tier funding approach under the Anusandhan National Research Foundation but stresses that the true effectiveness of the Scheme depends upon its timely roll-out and the ability of the latter to attract sustained private investment beyond the initial public funding.

The medium-term plan calls for a gradual lift in the overall R&D intensity, introduction of sector-specific incentives, tightening of intellectual property rights enforcement, and improvement of the resolution for commercial disputes, all meant to raise private-sector confidence.

On digitisation, the Committee noted that as of June 2025, 2.14 lakh Gram Panchayats are service-ready under BharatNet, and PMGDISHA has trained 6.39 crore people, exceeding its target. It took note of the integration with welfare schemes and PM GatiShakti by the eShram portal. Simultaneously, it cautioned on the persistence of “digital deserts” and uneven digital capacities.

The panel urged a shift away from an access-focused mindset toward a usage- and outcomes-oriented approach, seeking regular mapping of digital infrastructure quality at the block and district levels. It sought information on actual gains in employment through the integration between eShram and GatiShakti and demanded real-time data updation mechanisms by workers themselves.

It reproduced, importantly, the requirement to periodically assess whether formalisation brings sustained income security, social protection, and long-term employment, while stating that EPFO has been tasked with conducting a study through PDNASS within three months.

It also draws the attention of the Committee to fiscal stress across States, citing that, other than Gujarat, Maharashtra, and Odisha, every other State has a debt-to-GDP ratio above the recommended ceiling. The state of Arunachal Pradesh stands at 57 per cent. It has called for continued fiscal discipline and mechanisms to bring state-level debt ratios down towards advised levels.