How Union Budget 2022-23 Is Going To Boost Digitization In India?

The finance minister announced the introduction of Central Bank Digital Currency (CBDC) in her Union Budget for 2022-23, which would deliver a massive benefit to the digital economy. In addition, the digital currency will result in a more efficient and cost-effective currency management system. As a result, it is projected that the Reserve Bank of India will launch a Digital Rupee commencing in 2022-23, based on blockchain and other technologies which would give a rapid boost to the fintech innovations. Hence, here we will discuss the budget reactions from experts of leading fintech companies.

Anand Kumar Bajaj, Founder, MD & CEO, PayNearby has said that "The Ministry of Finance has presented a well-rounded, futuristic and optimistic Union Budget 2022 to propel the digital economy and boost the MSME sector. Given that 'inclusive development' and 'financing of investments' were two of the seven pillars of the Budget, it laid the foundation for faster financial inclusion and expansion of the credit ecosystem. In a bid to make MSMEs more resilient and competitive, the extension of the Emergency Credit Line Guarantee Scheme (ECLGS) till March 2023 is a critical step. This measure will ensure the continued handholding of MSMEs, which accounts for more than 30% of India's GDP and remains an important engine of economic growth, job creation, income generation and livelihood support."

He further added that "In addition, the proposal to skill both entrepreneurs and students with the help of technology will empower and enhance the productivity of the country altogether. For India to become a digital economy, all villages should have the same access to digital resources as urban areas. To augment this, the setting up of 75 digital banking units in 75 districts of the country is a commitment to taking high-end tech to the bottom of the pyramid. This step will ensure that the benefits of digital banking reach every nook and corner of the country in a consumer-friendly manner. The objective of citizen empowerment with digital growth and supporting fintech will directionally encourage delivering of digitization to India in its 100th year well ahead of time."

According to him "We are happy that over the past few years we were able to focus on Aspirational Districts and deliver on one aspect of financial inclusion and the score of 95% is encouraging. Going forward, we will focus to align with the Vibrant Villages Program and will continue focusing on the financial inclusion of farmers and senior citizens at the last mile. However, we wish the GST waiver for Banking Correspondents for financial inclusion services could have been taken into consideration. During Amrit Kaal, while our government aims to achieve the vision for India@100, we pledge to make India a digitally and financially inclusive nation. Zidd Aage Badhne Ki."

Bhavin Patel, Co-founder & CEO, LenDenClub has reacted to the budget announcement by saying "Union Budget 2022-23 started on a positive note with a vision for India@100. The measures announced have huge potential to pave a robust growth path for the next 25 years which can make India truly progressive, technologically advanced, and financially strong. Laying a substantial focus on MSMEs who account for more than 30% of India's GDP is extremely encouraging which will go a long way in driving economic growth and employment. The 6,000-crore programme to rate MSMEs to be rolled out over the next five years and the extension of the Emergency Credit Line Guarantee Scheme (ECLGS) till March 2023 are huge strides towards enhancing capital access to MSMEs' and making them more resilient and competitive."

He also said that "Although few tax slabs were anticipated, especially if returns from Peer-to-Peer (P2P) lending investments may have been exempted under Section 80C of the Income Tax Act or a different provision could be carved out to minimise tax rates, it would have encouraged investors to invest more. Extending the time of incorporation of the eligible start-up for tax incentives by one more year is hugely encouraging for aspiring entrepreneurs and the startup ecosystem. Overall it is a growth-oriented budget offering a slew of measures to drive consumption, investment, and economic revival in the aftermath of the pandemic."

Mr. Mandar Agashe, Vice-Chairman & MD, Sarvatra Technologies Ltd has said that "It is a digital budget. It has been an overall balanced budget with many positive announcements relating to digitization. We appreciate the government for taking a step forward with its 'Digital India' initiative by proposing 75 Digital Banking units in 75 districts by scheduled commercial banks. The measure will ensure the acceleration of digital payments across the country. Further, introducing an online e-bill system will reduce payment delays and be wholly paperless and end-to-end encrypted."

He further stated that "Given the rapid rise of digital banking, digital payments, and FinTech innovation, it was critical to develop digital infrastructure to support digital banking, which has enormous potential. Another excellent initiative of bringing in a blockchain-based digital rupee will lead to instantaneous financial transactions instead of the current digital payment system. We foresee that the digital rupee will be a game-changer and might outperform other digital currencies which are currently available."

Dilip Modi, Founder of Spice Money has expressed his views by saying that "It is extremely heartening to see the digital economy and fintech technology-enabled development being a key focus area for Budget 2022-23. The government's proposal of setting up 75 Digital Banking units in 75 districts of the country and providing online fund transfer between post office accounts and bank accounts will help in adding further tailwinds to expand necessary banking services to the last mile and enable us to take a step further towards our goal of financial inclusion through rural empowerment. The government's continuous focus on the digital payments ecosystem has paved the way for digital adoption amongst the unbanked and underbanked population of the country especially post the outbreak of the pandemic. We are hoping to see much higher traction this year that will address the current challenges faced by the citizens and create a #AtmaNirbharBharat."

According to him "Additionally, Finance Minister Nirmala Sitharaman's announcement on the allotment of funds through NABARD to finance start-ups for agriculture & rural enterprises along with the plans to launch delivery of hi-tech services for farmers including the use of Kisan Drones is a great move towards the development of the agri sector as well as for supporting nano preneurs. We are hopeful that the government's strong support and initiatives including the introduction of the digital rupee by RBI will help in accelerating the growth for the fintech sector and will create multiple avenues for the underserved parts of the country."

Joginder Rana, Vice Chairman & MD - CASHe has said that "The honourable finance minister must be congratulated for striking a right balance of growth and stability. The budget is growth-oriented, virtually touches all sectors, and lays down a path for a future-ready digital India. The monetary support for the digital payment ecosystem is a welcome move and also appreciable is the introduction of the blockchain-aided 'Digital Rupee'. Its instantaneous feature may disrupt the entire financial transactions like transfers, payments, credit, etc. It certainly sends a strong message that India is at the forefront of technology adoption. Finally, the extension of the ECLGS scheme will be of immense help for MSMEs as it will give the much-needed impetus for new businesses to come to the fore."

He further claimed that "As we commemorate 75 years of Independence, we welcome the remarkable initiative to establish 75 digital banking units in 75 districts across the nation. It will aid in extending high-tech benefits, including penetration of digital credit to all parts of the country. The issuance of digital currency by the RBI using blockchain technology is a step that would further stimulate the architecture of the digital economy, which is an objective of India@100. Furthermore, extending the tax holiday for another year till March 2023 will help businesses endure the economic slowdown inflicted by the COVID-19 outbreak. This will also mean more significant activity in the investment landscape, enabling robust early-stage venture funding possible for start-ups."