By Shravan Shetty
India, widely recognized for its vast potential, is now resolutely advancing towards achieving the status of “Viksit Bharat”. This vision encompasses not just economic growth but also focuses on inclusive development and social welfare, ensuring that the benefits of progress reach every section of society.
The recent trends on India’s fiscal health remain favourable offering a promising outlook for the country’s economic stability and growth with a dividend for FY24 being 141% higher than the Rs 87,416 crores of dividend payout in the fiscal year 2022-23 and gross Goods and Services Tax (GST) collections hitting a record Rs 2.10 lakh crore (April 2024), reflecting a 12.4% increase from the previous year.
This record dividend of an additional Rs 1.2 lakh crore and the net increase in GST revenue expected to generate around Rs 60,000 crore over the estimate, increases the government’s fiscal space. We believe while there will be an increase in allocation to capital expenditure, at least 60% will be directed towards the social and service sector, particularly healthcare and fintech.
In 2022, the Indian fintech sector emerged as the second most funded startup sector. India is one of the fastest-growing fintech markets globally, with the potential to reach $2.1 trillion by 2030. Yet there is a vast untapped market which still has limited access to financial products, especially in the investment space that can help improve financial inclusion.
The increased fiscal space provides a golden opportunity for the government to deploy the additional funds to provide funding for innovative products to be created especially in fintech space. This can be achieved by creating a financial inclusion fund which can help fintechs scale especially in rural pockets.
The existing public sector bank and postal network in addition to the well-established structures like SHGs and FPOs can be incentivised to help increase penetration. The above actions coupled with financial literacy programs, will promote a culture of saving and long-term financial planning.
The additional fund should also be used to encourage innovation solutions and incentivise employment generation, for example “employment-linked incentives”. These initiatives will help leverage the multiplier effect instead of merely increasing allocation to subsidies or cash handouts.
A portion of the surplus should also be reserved to drive research and innovation, thereby supporting the startup ecosystem. By providing targeted financial support and creating innovation hubs, the government can nurture budding entrepreneurs and start-ups, particularly in high-potential areas like healthcare, fintech, and green technology.
The health sector, with its growing demand for advanced medical services and expertise, presents a significant growth opportunity that the country needs to harness. At least 30% of this surplus should be directed towards strengthening healthcare systems via the establishment of a “medicity” concept that can significantly enhance India’s healthcare infrastructure, transforming it into a hub for advanced medical services.
Medicity would integrate cutting-edge medical facilities, research centres, and training institutions, creating a holistic environment for healthcare excellence. This initiative can attract international patients, boosting medical tourism and generating substantial revenue from the export of medical services.
There is also scope to increase the social safety net by leveraging government schemes such as the Employees’ Provident Fund Organisation and the Employees’ State Insurance Corporation. Actions like increasing the wage ceiling and bringing gig economy workers under ESI can help increase social security coverage.
Additionally, more focus needs to be given to schemes about enhancing vocational, skilled and technical training programs and digital learning that significantly advance India’s education system.
India’s vision of Viksit Bharat hinges on a comprehensive strategy that blends robust economic growth with inclusive development, digital penetration and social welfare. Enhancing social welfare schemes and expanding financial inclusion initiatives in critical sectors like social, healthcare, financial inclusion etc. will ensure that the rewards of economic advancement reach every segment of society, promoting a more fair and prosperous future for every Indian.
Shravan Shetty is Managing Director at Primus Partners. Views expressed are personal. Reproducing this content without permission is prohibited.