Budget 2018: Fintech players in the country have reason to cheer, thanks to Union finance minister Arun Jaitley’s Budget 2018 which mentioned that his ministry is examining the policy and institutional development measures needed for creating the right environment for fintech companies to grow in India. Fintech companies feel that the government’s efforts towards strengthening India’s position as a digital economy through investments around new-age technologies such as Artificial Intelligence and others would immensely boost their expansion.
From promoting digital economy perspective to allocating funds towards creating digital infrastructure to promoting cashless payments to building smart cities to setting up 5 lakh Wi-Fi hotspots, fintech companies had a slew of ideas and projects to work upon in a bid to spur growth. “There is visible support for the fintech industry as the FM specifically mentioned that fintech is playing an important role in the country’s growth and hence announced setting up a working group for its growth,” says Adhil Shetty CEO and co-founder, BankBazaar. NITI Aayog will initiate a national programme to direct efforts in AI.
Budget 2018 doubled the allocation on Digital India programme to Rs 3,073 crore in 2018-19. Harshvardhan Lunia, CEO and co-founder, Lendingkart Group, says: “The continued focus on MSMEs with allocation of Rs 3794 crore for credit support, along with backing the efforts of fintech companies, will help in creating more avenues of financial inclusion for the underserved segment. The emphasis on complementing existing digitisation efforts by connecting villages through high speed optic fibre networks and building Wi-Fi spots will give an impetus to upcoming digital sectors such as fintech and edtech that rely on connectivity.”
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Agrees Bhavik Mehta, director, FinREQ. “FM announced setting up of the working group for its growth which has potential to reach untapped cities and villages. This makes a strong case for the participation of all stakeholders in supporting MSME growth through fintech lending,” he says. To further broadband access in villages, the government proposes to set up five lakh Wi-Fi hotspots to provide net connectivity to five crore rural citizens. Amit Nigam, CEO, BANKIT says: “Budget gives a big push to the Indian fintech market which is poised to touch $2.4 billion by 2020 from the current $1.2 billion in FY 2016-17.”
Budget 2018 has identified 99 Smart Cities and provisioned an outlay of Rs 2.04 lakh crore. Digital payments will play a key role in enabling a true smart city. Jose Thattil, founder, Phi Commerce says: “In a mobile-first country such as India, data connectivity plays a critical role. The government’s decision to create 5 lakh Wi-Fi hotspots in rural India is welcome. People from rural India will be able to conduct cashless transactions using BHIM UPI, Aadhaar Pay and BharatQR.”
The finance ministry has acknowledged the importance of digital lenders in aiding the growth of the MSME sector. “As founding members of The Digital Lenders Association of India (DLAI), we met with the finance ministry along with other leading fintech lenders last year and presented a whitepaper with recommendations to foster fintech lending. We’re delighted to see those suggestions being incorporated,” says Sashank Rishyasringa, co-founder of Capital Float.
Since the government’s push for a cashless economy with the announcement of demonetisation in India in November 2016, the country has seen rapid transformation and growth in the digital payments segment. Kumar Srinivasan, CEO (India),Matchmove, says: “ With an unbanked population of over 250 million Indians and the country moving towards 520 million smartphone users by 2020, it is a wise move by the government to incentivise digital payments to encourage consumers to shift to “cashless” and increase bandwidths to reach out to a larger populace.” Fintech is seeing increasing acceptance with the clear focus of the government to give a further boost to their ‘Digital India’ campaign and digitization at large.
Akshay Mehrotra, co-founder and CEO EarlySalary says, “We see a huge and very positive move to enhance mass acceptance of digital credit across the country. Budget 2018 has reduced taxation for companies with a turnover of up to Rs 250 crore which in turn will help improve the focus on building new mid-size ventures.”