Budget expectations | Akash Sinha, Co-founder & CEO | Cashfree Payments
The recent regulations laid by the RBI for the Indian fintech ecosystem has made India one of the most favorable markets for fintech organizations across the globe. The upcoming Union Budget holds high importance, as the Indian fintech ecosystem is at the cusp of expansion, both within the country and internationally. It is encouraging to see that the government, as demonstrated by a number of recent initiatives, recognizes the reach of fintech to the underserved and unserved regions of the nation. These government-sanctioned fintech innovations are further driving increased financial inclusion across the country. Therefore, it is crucial that the growth momentum of fintech continues in 2023 as well.
- Deepen the usage of offline digital payments:
More offline digital payment products, such as UPI 123 and UPI Lite, should be introduced to aid digital penetration in semi-urban and rural regions of India. Offline digital products offer tremendous relief to consumers in these areas who face traditional barriers to entry, such as lack of reliable infrastructure and slower devices.
- Accelerate the growth of cross-border payments:
The upcoming budget should also focus on increasing the acceptance of homegrown payment solutions in more geographies, increasing cross-border transactions. More initiatives, such as allowing Non-Resident Indians (NRIs) to directly make bill payments using Bharat Bill Pay System (BBPS), will act as a growth catalyst for cross-border payments when introduced.
- Encourage skill development and capacity building:
The budget should include incentives/policies that encourage skill development and capacity building across sectors. In particular, skill development in technology and digital finance will help small entrepreneurs avail the benefits of innovative financial products offered by fintechs. This will boost mutual growth for both sectors. The promotion of fintech clusters, such as the Karnataka government’s Beyond Bengaluru initiative, have significant potential to provide crucial employment opportunities, thereby boosting fintech’s contribution to the country’s tech industry. Establishing fintech clusters in smaller cities and towns is vital to achieving widespread development and inclusivity.
- Enable greater digitization in tier 2 and tier 3 cities through newer technologies like 5G
With one of the world’s highest number of mobile internet subscribers, India has the potential to harness the power of 5G to support seamless hyperconnectivity. 5G will not only drive greater mobile and internet penetration across the country but will also play a crucial role in further boosting digital payments in India. This will lead to greater financial inclusion as more fintech innovations can be developed to reach the unserved and underserved sections of society.
- Boost MSMEs through promoting adoption of digital infrastructure
While India’s MSME sector is enormous and plays a significant role in the country’s GDP, a hurdle to this sector’s long-term development is the inability to embrace the right technology solutions. Generating the right kind of awareness about the benefits of digital infrastructure and the availability of the payments ecosystem would be beneficial to the country’s 6.3 crores Micro, Small, and Medium Enterprises (MSMEs). Access to digital banking, lending, collections, and other fintech products can transform the MSME sector, providing additional crucial employment opportunities and boost this sector’s contribution to India’s GDP.
The digital payments sector expects that this year’s Union Budget will focus on further building the relationship between businesses, industries, the fintech ecosystem, and other important pillars of the Indian economy.