On February 1, Finance Minister Nirmala Sitharaman will unveil her fifth Union budget under the Prime Minister Narendra Modi government for the fiscal year 2023-24. The Budget has garnered significant attention from both the general populace and the business community. Many anticipate that the Budget will likely be growth-oriented, focusing on capex, manufacturing, infrastructure, rural economy, and more. All eagerly await the Budget as it holds the potential to shape a prosperous economic future for the country and its citizens through measures aimed at promoting sustained growth, social welfare and equitable development.
As per reports, the finance minister recently met with Fintech industry experts to understand their expectations from the Budget. Despite a turbulent 2022, the fintech industry stakeholders express optimism about the direction the industry will take in 2023. Many Fintech industry leaders expect policies and reform to support the sector’s growth by easing the burden on the common man.
“The upcoming Budget will undoubtedly be geared towards augmenting the growth of the Indian economy, but it also needs to address the challenges faced by the common man and the salaried class as we recover from a global pandemic and tackle the ongoing global economic slowdown. People are especially pinning their hopes on the upcoming Budget to address the issue of unemployment, control inflation, and make essential goods and services more affordable. The salaried class is looking for some cheer on the personal tax front, hoping that the annual basic exemption limit gets enhanced to Rs 5 lakhs from the existing Rs 2.5 lakhs,” said Bipin Preet Singh, Co-Founder & CEO of MobiKwik, India’s leading Fintech platform.
“The increasing cost of living, rising inflation and the lingering effect of the global pandemic has impacted the middle class and the lower middle class the hardest and savings have taken a hit. Indians are feeling the pinch and putting lesser and lesser amounts in the piggy bank, and this is a huge cause of concern for the Indian economy. We expect the Budget 2023-24 to address this situation by providing some tax relief to the salaried class, bringing down the cost of goods and essential services to control inflation and increasing the limit under Section 80C. Overall, the upcoming budget should be geared towards creating a savings and an investment-oriented economy,” said Sousthav Chakrabarty, Co-Founder & CEO of Siply, a Bangalore-based tech-enabled micro-savings platform.
The FinTech industry is one of the fastest-growing industries in the segment of technology startups and is recognised as a crucial element in the government’s financial inclusion journey. According to reports, the fintech industry is expected to reach Rs 9.27 trillion by FY27, expanding at a CAGR of 24.96 per cent during the FY22-FY27 period. Fintech firms are also playing a major role in India’s Digital India movement and are expected to play a pivotal role in India’s aim to become a $5-trillion economy.
“Additionally, while the Indian government has taken several measures to give startups the impetus to grow, further measures are needed. For one, we expect an increase in the angel investor pool at the seed stage and a tax relief on Angel tax which wipes away a significant part of the surplus that start-ups need for their growth,” Sousthav added.
India has wholeheartedly embraced digital payments, and as the country pushes for a cashless economy, some fintech players feel that there is a need to promote services that can help build a secure digital transacting ecosystem. “One such service that needs attention in the upcoming Budget is Digital Escrow which can play a pivotal role in building trust in digital payments for various use cases. I also hope that the upcoming Union Budget will bring measures to ease the financial burden on start-ups, like reducing taxes with no GST until Rs 10 crore turnover annually and introducing greater tax breaks for depreciation on fixed assets, reducing angel tax to promote seed stage investments and doing away with dual taxation on ESOPs. Furthermore, the upcoming Budget should further incentivise the development of made-in-India software products, and the GST rate of 18 per cent on the same should be reduced to help indigenous software creators flourish in the domestic and international markets,” said Vineet Singh, Co-founder & CEO of Castler, a pioneer in the field of Digital Escrow in India.
India has been a phenomenal success story when it comes to fintech adoption and pioneering new ideas. Niranjan Vemulkar, Co-founder & CEO of Yellow, a company that aims to usher in the future of digital succession and estate planning in India, said, “Presently, people who wish to make a Will must sign the document in person for it to be legally recognised. Even though bank and mutual funds providers in India are allowed to offer e-signature attestation services to their customers, digital Will makers are not allowed this benefit yet as per the Information Technology Act of India. We hope that digital Will makers in India are granted permission to provide e-signatures services so that more and more Indians can easily create a Will to protect their loved ones.”
Vikas Garg, Co-founder and CEO, Paytail said, “The Budget for 2023-24 is going to play a proactive role to pave the way for the growth of fintechs aligned with the growth of MSMEs where digital expansion takes a centre stage. Fintech companies are navigating the country’s path towards financial inclusion, where the robust techstack in combination with the strong distribution network is going to ensure the availability of financial products across the country. As one of the players operating in the fintech environment, we are hoping for tax subsidies that would support more investment in the fintech sector, thus facilitating creation of innovative technologies for better credit provision. In terms of regulation, a dedicated regulatory body for the fintech domain would give a more extensive idea in terms of formulation of credit policies to ensure proper risk management and reduce delinquencies. Also, as India outperforms global growth of digital transactions, investing heavily in the same can prove to be fruitful in terms of providing credit to underserved and untapped business institutions and individuals.”
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