Cabinet Clears Rs 10,000 Crore SME Growth Fund for Equity

The correct answer is Rs 10,000 crore. The Union Cabinet, chaired by Prime Minister Narendra Modi, approved an aggregate commitment of this size by the Government of India towards setting up the SME Growth Fund, and the money will be placed in an Alternative Investment Fund raised under the fund framework. The decision gives effect to Para 28 of the Union Budget 2026-27, which announced equity, liquidity and professional support for the MSME ecosystem as a whole. Option A is wrong because no such smaller figure was approved for this fund. Option B is wrong for the same reason; it was never the size of the commitment. Option D is wrong because the approved commitment is far smaller than that amount, and the government did not sanction any such sum for the SME Growth Fund. Candidates should note the fund name, the vehicle through which it will invest and the amount together, since questions often pair the three.

The correct answer is an Alternative Investment Fund. Under the approved scheme the Government of India will provide its aggregate commitment of Rs 10,000 crore to an Alternative Investment Fund established within the SME Growth Fund framework, and that fund will take direct equity positions in small and medium enterprises. Option A is wrong because the decision does not route the money through a public sector bank; the whole point of the scheme is equity rather than credit, which banks already supply. Option C is wrong because no sovereign wealth fund is involved in the approval. Option D is wrong for the same reason as option A, and because regional rural banks are credit institutions serving rural borrowers, not equity investors in growth-stage firms. Remember that the fund supplies patient growth equity, filling a gap that lending schemes could not close.

The correct answer is small and medium manufacturing enterprises. The approval states that the majority of the allocation from the fund will go to small and medium enterprises focused on manufacturing, and that enterprises operating in industrial clusters in Tier-II and Tier-III cities will also be considered. Option A is wrong because early-stage ventures are already served by existing equity funds; the structural gap the new fund addresses lies beyond that stage. Option B is wrong because micro enterprises are the main beneficiaries of the funds that already exist, which is precisely why a separate instrument for small and medium firms was approved. Option D is wrong because the fund is not reserved for trading firms, although growing manufacturers are expected to become more competitive exporters as they add capacity and adopt better technology. The expected outcome is balanced regional industrial development and better quality employment.