"Just as agriculture is vital for the economy, so are the medium and small scale enterprises also called the MSME sector.
"Government has taken some decisions in the interest of small and medium businesses, which will also boost employment," he said in an address to the nation on New Year's Eve.
Noting that the central government underwrites loans given by banks to small businesses through a trust, he said that loans were covered up to one crore rupees and this limit was now being doubled.
"Earlier the scheme only covered bank loans. Hereafter it will cover loans given by NBFCs (Non-Banking Financial Companies) as well. This decision will enable better access to credit for small shop-owners and small enterprises.
"Banks and NBFCs will not levy high interest on these loans, as Government of India is bearing the cost of underwriting them," he said, adding banks to raise the credit limit for small industry from 20 per cent of turnover to 25 per cent.
"Many people connected with this sector have made cash deposits in the last few weeks. Banks have been asked to take this into account when deciding on working capital."
He said that a few days back, the government had announced a major tax relief for small businesses.
"Income of businesses with turnover of up to Rs 2 crores was calculated at 8 per cent of the turnover. Now, for such businesses income from digital transactions will be calculated at 6 per cent. This will effectively reduce their tax liability by 25 per cent," he said.
He also said that progress of the MUDRA (credit guarantee fund for micro units development refinance agency) Yojana has been "very encouraging".