Digitisation and universal access to financial services are two of the most important themes in Union Budget 2017, says Madhur Deora, CFO, Paytm. “This would not only help the country’s huge unbanked and underbanked population get access to quality financial services but also encourage platforms to scale and achieve financial inclusion,” he says. Here are the three Budget expectations from him:
1) Projects like NOFN (National Optical Fiber Network) that would ensure the country gets high-speed, reliable Internet access should be fast tracked. Continuing to focus on smart cities projects is another important need of the hour. Initiatives like Wi-Fi at Railway Stations, bus stations, community centres, etc. can go a long way to ensuring millions of Indians are added to the mainstream economy. Moreover, we can use a large amount of unutilized fund with USOF to subsidise the cost of data for select customers and help them come online. Another important aspect of improving access to digital services is in terms of tax rebates for the production of affordable smartphones.
2) The second important focus area is developing an ecosystem to support financial inclusion. Disbursal of government benefits in a bank account is just the first step. Ubiquitous acceptance of digital payments is critical to ensure these funds are also used digitally. Transaction fee needs to be minimised especially on low-ticket transactions. Tax rebates can be given to merchants doing a significant share of their sales through any digital method.
In addition to digital payments, initiatives should be taken to increase access to credit. It may be mandated to disburse a certain portion of loans by financial institutions only to merchants who have embraced digital payments beyond a certain threshold. We should set up an institution similar to Deposit Insurance and Credit Guarantee Corporation (DICGC) to ensure credits up to a fixed amount so that small loans can be disbursed with minimum hassles.
3) The third focus area is the digital literacy drive. Schools, colleges and NGOs should be given incentives to conduct training sessions for consumers and merchants to encourage them to use digital services. The corporate sector can also be encouraged to promote digital literacy.
Given the decreasing cost of smartphones, the innovation in the fin-tech industry, and the awareness and momentum created by various digital initiatives, India has a real opportunity over the next couple of years. Conducive policies for digital infrastructure, and creating a level playing field between traditional financial institutions and innovative financial technology companies can help us drive financial inclusion for hundreds of millions of Indians.
Narendra Modi government will be presenting Budget 2017 on February 1. Yesterday, Supreme Court dismissed the plea to change the Budget date from February 1. The Budget is special not only for the fact that it has been preponed but more importantly because it comes within months after Modi government’s massive demonetisation drive. Most analysts and economists expect Budget 2017 to be tax-payer friendly, especially given the pain that common man has faced after old Rs 500 and Rs 1000 notes ceased to be legal tender money.