Budget 2023: The Fintech sector has been a frontrunner for the growth of the India’s financial industry. Presently, India, which is among the world’s fastest growing fintech markets, has roughly 6,600 Fintech start-ups with consumers increasingly becoming financially literate with adoption of technology and are frequently buying financial products through apps and online portals.
The sector is rightfully portrayed as a vital constituent for supporting Indian government’s efforts for financial inclusion and digital India, and a bridge to reach the $5 trillion economy target by 2025.
With the upcoming Union Budget 2023-24, the timing has been ideal for the government to introduce relevant policy measures to boost the Indian Fintech sector. As the nation gears up for the Union Budget 2023, let’s take a look at what Fintech companies expect for finance and banking ecosystem.
Deepak Aggarwal, Co-Founder, Co-CEO, Moneyboxx
With 65% of population residing in rural India and largely dependent on agriculture and allied sectors, fast and sustainable growth in the sector has long-lasting implications for inclusive growth. While policy initiatives such as priority sector lending targets, Jan-Dhan accounts, Mudra Yojana have led to improved access to credit over the years, further impetus is needed given that rural India received only 9% share of banking credit despite contributing close to half of country’s national income.
New-age, Fintech players are expected to play a pivotal role along with banks in widening financial inclusion and ease of availability of credit. In the upcoming Budget, policies focused on addressing this structural credit gap and measures to boost rural income would be welcome.
Rohit Arora, CEO and Co-founder, Biz2Credit and Biz2X-
In the upcoming budget, it is pertinent for the government to send out a clear message around attracting FDI in manufacturing, as well as in the infrastructure segment. India has big opportunity to play in the China Plus One policy, the business strategy which aims to encourage firms and enterprises to expand their operations outside of China. India needs to act fast in helping such businesses set up operations in India as countries like Vietnam are quickly taking a large chunk of businesses away.
In the financial sector, keeping in mind that MSMEs contribute around 29 per cent to India’s GDP and employs a significant number of people, it is imperative for the Government to roll out reforms, including the introduction of a clear roadmap around setting up of standalone digital banks. These banks can play a huge role in increasing credit access to MSMEs as well as to other bigger businesses. Such reforms will also help in attracting long term FDI and create a lot of jobs in the process.
India has already proven its mettle in the fintech space over the past few years and such conducive reforms will further add the ‘big push’ to the fintech sector. India has a veritable competitive advantage in this sector and now, it needs to build more scale to showcase its strength to the world.
Gaurav Jalan, Founder & CEO, mPokket
The constant innovative reforms and technological advancements have provided an impetus to the growth of the FinTech industry in India. With the annual budget just around the corner, it is expected that the government will prioritize the needs of the FinTech players and implement policies to add to their growth trajectory.
It can be expected that the government will bring in reforms to strengthen the partnerships between FinTech institutions and banks. We are expecting that the Finance Minister will take into account the financial burden on start-ups and suggest policies to ease it. In the last budget, she gave major tax reliefs to start-ups and employees, in order to boost their development and to resolve the dual taxation issue and the tax burden that employee stock ownership plans (ESOPs) have on employees. However, the qualification criteria were too stringent, and as a result, very few start-ups could gain benefits from them. So, we can expect that the government will look into this and provide tax relief to budding FinTech start-ups and their employees.
India’s journey to financial inclusion is being paved by exceptional financial solutions provided by FinTech companies. The work that we are doing to make financial services accessible to all is a major positive outcome of digitization. FinTech will continue to grow at a faster rate and penetrate deeper into the country only if rural areas have a strong digitization network.
This sector expects more assistance from the government to develop strong partnerships with banks and financial institutions in order to foster better financial inclusion, both offline and online. The upcoming budget should also consider and offer tax benefits on the total expenditure incurred by FinTech startups, maybe in the form of a small GST subsidy.
Since personal loans now make up the bulk of the loan market, efforts to offer some form of tax refund for people who take out personal loans and education loans, similar to what those who take out house loans receive, would also be appreciated by people who take out such loans.
Ankur Nijhawan, CEO, AXA France Vie—India Reinsurance Branch
We anticipate the upcoming Budget will focus on policies to promote economic growth and pandemic resilience. Given the recent increases in health insurance premiums and the need to provide basic financial protection against natural catastrophes such as Joshimath, the insurance industry is expecting a combined tax relief of up to Rs1 lakh for health and household insurance.
The industry also hopes the Finance Minister will bring these basic protection plans under the zero GST mark or tax it in the 5% bracket at the most. While widening the financial protection net, such a move would also increase insurance penetration in India. Easing norms and providing help in the form of tax benefits could go a long way in opening up the segment to the currently underserved and unserved sections of the population.