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Budget 2022 an encouraging step towards enabling financial inclusion: Alok Mittal, Cofounder & CEO, Indifi Technologies

Apart from this, linking and widening the scope of MSME portals is a meritorious exercise, especially since small businesses are increasingly comfortable with having their business needs met digitally.

Alok Mittal Cofounder & CEO, Indifi Technologies
Alok Mittal Cofounder & CEO, Indifi Technologies

By Alok Mittal

The Budget of FY22 is set up to be a springboard for the transformation that the economy will witness in the next 25 years, with all-inclusive welfare, digital economy and fintech, tech-enabled development at the helm. This translates to larger roles for the MSME sector, lending ecosystem and the fintech industry, in the economy.

To further support and strengthen MSMEs, the extension of the credit schemes is a welcome step. Earmarking the additional Emergency Credit Line Guarantee Scheme (ECGLS) allocation for hospitality and related sectors that are still grappling with the effects of the pandemic will provide much-needed footing. Along with this, the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) to facilitate an additional Rs 2 lakh crore can also go a long way in strengthening the sector, if the transmission of both these schemes is done effectively. Currently, an impediment to this is the price cap that makes it inaccessible for many micro-SME lenders, and hence to those micro enterprises. Addressing these pricing caps could be a salve for distressed micro enterprises.

While the Rs 6,000-crore acceleration programme for MSMEs was introduced, this could be pivotal for the sector, but the specifics of it are yet to be announced. These details will be eagerly awaited by the MSME sector reeling from the pandemic. The Economic Survey rightly pointed out that the services sector MSEs have been most affected, and still operating under the pre-pandemic levels — it is hoped that this acceleration program will focus on putting those MSEs back on the growth track. Apart from this, linking and widening the scope of MSME portals is a meritorious exercise, especially since small businesses are increasingly comfortable with having their business needs met digitally.

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In terms of financial inclusion, as a step towards increasing the reach of digital banking there needs to be clarity on the scope and nature of the digital banks that are being set up in the 75 districts. Integrating post banks to the core banking sector is a substantial leap forward in terms of financial inclusion, as highlighted by the finance minister.

Initiatives taken for start-ups towards amping up the ease of doing business in India are welcome additions to the Budget. Moreover, the steps taken for existing start-ups like extending tax redemption and steps taken to attract more start-ups by looking to increase investment into the ecosystem is encouraging for the entrepreneurial spirit of India.

The Budget, by and large, is an optimistic blueprint for the MSME and fintech ecosystem. Taking into account the rapid transformation and acceleration of the digital economy, clarity on the particulars of certain announcements could be crucial to ‘sabka vikaas’.

The author is Cofounder & CEO, Indifi Technologies

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