Budget Expectations | Pushing digital technologies and payment innovation to tackle supply chain challenges | Fintech Leaders Talk

 The Finance Minister Nirmala Sitharaman is all set to present her third Union Budget on February 1, 2022. This year the budget is likely is to focus on the government making strides through several initiatives, including the recently set up Fintech Department and the introduction of Payment Investment Development Fund (PIDF) to incentivize fintechs in India. In parallel, NBFCs and fintech are expecting to see more opportunities from the government to expand the market scope and scale and impact long-term changes in the financial industry. Leading fintech players and startups share their thoughts on what are they expecting from the Government and Union Budget this year. These cover specific areas such as digital payments & digital banking, rural fintech and digital lending from Mswipe, Tide India, & Global PayEX. Please find details and quotes below –

1.    Digital technologies in B2B and payment innovation to tackle supply chain challenges and eradicate frictions by Narayan ‘Naru’ Ramamoorthy, Chief Revenue Officer, Global PayEX

2.    To empower small business by propelling digital future and incentivise them to encourage the adoption of digital payments by Ketan Mehta, CEO, Mswipe

3.    Ease of credit access and incentive for digital banking infrastructure by Gurjodhpal Singh, CEO, Tide (IN) 

Narayan ‘Naru’ Ramamoorthy, Chief Revenue Officer, Global PayEX

“As the Indian economy recovers from the impact of the COVID-19 pandemic, the upcoming Union Budget of 2022-23 will be significant in transforming India from a US$2.7 trillion to a US$5 trillion economy. A key to achieving this is to enhance productivity across the B2B supply chain, including Purchase Orders (PO), invoices, transport documents, goods & service receipt notes, payments, reconciliation and financing/lending. Over the past few years the government and regulators along with Fintech players have taken several initiatives on this front focused on payments, invoices, tax reconciliation and SME financing. For instance driving growth and adoption for e-NACH, e-Invoicing, Tax Credit Statement (Form 26AS), GSTR1 (sales return), GST2A (purchase-related dynamic tax return), GST2B (Input Tax Credit), and MSME lending platforms like TReDS.

 

This year, we hope the government and Union Budget will focus on further enabling working capital efficiency and productivity across the B2B supply chain and also help the rapidly evolving B2B SaaS companies and ecosystem in India. Considering the ongoing supply chain challenges across the globe, we believe some key areas that will help enhance supply chain efficiency and productivity include continued incentives for adoption of digital technologies in B2B, payment innovation such as open banking, higher limits for eNACH, additional data and measures/laws to ensure MSMEs (and all customers) get paid on time, and building further on the e-Invoice, e-way bill and GST compliance success. For e.g. can customers get a validated invoice directly from Govt e-Invoice portal, which will add huge AP automation and payment efficiencies. Lastly, B2B SaaS companies can play an important role in democratization and automation of supply chain, which will enable the digital transformation of Indian Economy. I hope the Government in its role as an India GDP enabler will continue working closely with B2B SaaS companies to accelerate the India digitization story.”

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Ketan Patel, CEO, Mswipe

“The SME sector is the backbone of Indian economy. In the upcoming budget, we expect the Government to make announcements that will empower small businesses thereby reviving the economy from the impact of the pandemic. In November 2021, the government announced the Special Credit Linked Capital Subsidy Scheme for the MSMEs (Micro Small and Medium Enterprises) in the services sector. This should be extended to SMEs whose turnover is less than Rs. 5 crore as it will help them procure service equipment through institutional credit for advancement of their technology. The Government should also look at tax breaks for companies providing technology support to MSMEs. At a time when we are expecting the third wave of Covid to hit economic activity and businesses are facing difficult times, the Government must take measures to meet the SME lending requirements. Subsidizing the cost of funds to NBFCs that focus on lending to small merchants for loans below Rs. 20 lakhs is way to ensure easy access to credit. Besides, we expect the Finance Minister to increase credit guarantee for lending while also providing relief in terms of tax sops or subsidizing manpower cost for digital players to  promote digital payments in tier 3 to 6 towns. Lastly, this Budget should further look at propelling the country towards a digital future. While multiple initiatives have been undertaken to promote digital payments, the Government must look at given some form of incentive to small businesses to encourage the adoption of digital payments and further strengthen the payment infrastructure of the country, especially in smaller towns.”

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Gurjodhpal Singh, CEO Tide(IN)

“This is third year of the pandemic and MSMEs have been struggling all through since early 2020, several small businesses had to downsize or shut shop as they were challenged by severe liquidity crunch and dipping demand. Being central to the economy, MSMEs need assistance to be back on track and government can provide that much-needed support through a stronger policy thrust. Unavailability of working capital, cost of compliance and taxation are potential challenges that need be addressed. We are looking forward to a budget that will further push for digitization. Significant spends and allowances for infrastructure, especially digital banking infrastructure will also be an important ingredient for the success of both, the budget and MSMEs. These steps can boost financial inclusion to a great extent. Lastly, steps with focus on new businesses and enabling entrepreneurship are key to provide the much-needed impetus for the sector.”