Experts Outline Key Priorities and Expectations Ahead of the 2024 Budget
23 July 2024: Experts from a range of industries are sharing their goals and expectations for the forthcoming fiscal plan as the 2024 budget season gets closer. Policies that combat inflation and promote economic expansion, such as prospective tax changes and higher public investment in infrastructure, are especially desired by economists and financial experts. To narrow the growing socioeconomic gaps, proponents of social policy are arguing for increased education spending, improved social safety nets, and increased financing for healthcare. Environmentalists pressure the government to commit more funds to climate resilience and renewable energy projects. Everyone calls for a well-rounded strategy that promotes social justice and long-term economic stability while guaranteeing fiscal discipline.
Sundeep Mohindru, Promoter & Director, M1xchange,
“In the upcoming budget, we expect the government to focus on strengthening MSMEs which can lead India towards $7 trillion economic goal. However, their growth is hindered by limited access to bank credit, leaving a $2.5 trillion financing gap. Incentives for MSME registrations on Udyam, fiscal support for banks and NBFCs to prioritize MSME working capital loans, and reduced compliance burdens and borrowing costs will eventually boost their contribution. Most of MSMEs aren’t traditionally credit-ready, and banks lack infrastructure to reach them. Therefore, stronger digital methods of credit assessment can bridge the credit gap. This, in turn, would enable MSMEs to access the finance needed for their working capital requirements. This ensures MSMEs are credit-ready, thereby making risk assessment easier for financial institutions.
India’s preliminary interest in adopting the new legal framework under MLETR which brings Digital Negotiable Instruments (DNIs) into reality, along with fintech partnerships has the potential to achieve digital financial inclusion for MSMEs.
Additionally, boosting exports to achieve $1 trillion in merchandise exports by 2030 is vital. The policy support towards MSMEs like those implemented by successful Asian economies such as Taiwan and South Korea are necessary to enhance their global competitiveness.
The budget should support insurers adopting TReDS quickly, activate the Credit Guarantee Fund Scheme for Factoring (CGFSF), and create a buyer-less ‘second window’ for supplier financing. We also expect measures to protect MSMEs from cybersecurity threats, economic shocks, and supply chain disruptions with a robust government and private sector collaboration.
We support establishment of Self-Regulatory Organizations (SROs) for the fintech sector is essential to set industry standards and encourage ethical practices. Stronger emphasis on adopting digital credit assessment methods is necessary to address the credit gap for MSMEs”.
Pushkar Mukewar, CEO and Co Founder, Drip Capital
“The upcoming budget can support MSMEs through strategic incentives when it comes to emerging technology adoption. We are at the cusp of reaching the ambitious target of USD 2 trillion in exports by 2030. This can’t happen without advancement in digital capabilities and digital public infrastructure. These innovations are needed for productivity, efficiency, and global competitiveness to seize the industry 5.0 prospects. Ambitious government initiatives such as the Trade Connect e-Platform can play a huge role in connecting exporters, MSMEs with the global trade ecosystem.
The significant financing gap of $2.5 trillion calls for innovative solutions to mitigate risks and reduce interest rates through robust credit guarantees. There must be tailor-made financing solutions for startups and MSMEs. Also, alternative financing options such as crowdfunding, invoice discounting, and supply chain financing can provide the much-needed capital. In fact, quick access to finance is imperative for MSMEs to overcome challenges such as delayed payments that impact their liquidity and competitive edge.
Increased government support is essential in accelerated funding for credit schemes, simplification of regulatory frameworks, and initiatives aimed at enhancing the ease of doing business”.
Anand Kumar Bajaj, Founder, MD & CEO, PayNearby
“As we anticipate the Union Budget, the focus on Bharat, India’s rural heartland, takes centre stage. The journey towards a $5 trillion economy hinges on the transformation of these rural areas, driven by groundbreaking financial and digital solutions provided by leading fintech players. A robust tech stack riding on the back of a strong distribution network has opened doors for Bharat to access innovative financial and digital services. Our commitment to making banking, credit, assurance (insurance + asset), and e-commerce services accessible to Bharat is exemplified by the unique infrastructure we have built. However, for these services to reach citizens at the last mile, technology, security, trust, and Government support are crucial.
Towards this purpose, in the Budget 2024, we urge consideration of
1. Tax benefits on total expenditure for fintechs involved in the financial empowerment mission. In light of this, we propose specific measures, including a special 5% GST rate for startups working for last-mile empowerment, facilitating crucial financial and digital services to the citizens. A GST subsidy, even a modest one, would significantly ease the reach of financial services and government benefits, encouraging innovation in the financial empowerment space.
2. We also urge for a waiver of GST on all financial services made available from BC outlets, an Income Tax relief for the next seven years, and reduced import duty on essential financial services devices.
With the majority of PayNearby’s BC network operating in tier II and beyond regions, serving as banking hubs in areas with limited financial infrastructure, this would ensure sustainable growth and motivate more last-mile retail banking agents to offer seamless services everyone, everywhere.”
Dhriti Prasanna Mahanta, Vice President & Business Head, TeamLease Degree Apprenticeship.
With the 2024-25 budget just around the corner, the Modi government is poised to further strengthen the foundation for Viksit Bharat by ensuring policy continuity that promotes ease of business, strengthens infrastructure development, and prioritizes job creation and skill development across sectors. This vision hinges on further bolstering infrastructure, with a particular emphasis on last-mile connectivity in critical sectors such as transport and logistics. Building upon the foundation established in previous budgets, the government is anticipated to make substantial investments in digital infrastructure, driving the nation towards a $5 trillion economy. A critical focus must be on supporting small and medium-sized enterprises (MSMEs), by enhancing the access to finance and cutting-edge technologies, equipping them to compete globally and fostering innovation and entrepreneurship. Furthermore, investments in multi-modal connectivity, advanced air terminals, and infrastructure developments are also crucial to support seamless trade and economic growth, aligning with the Prime Minister’s Gati Shakti Plan and the National Logistics Policy.
The true engine of India’s growth, however, lies in its people and by strategically integrating AI into industries like logistics and manufacturing, India can achieve a quantum leap, surpassing traditional development stages. Yet, AI is a double-edged sword. While it automates tasks and boosts efficiency, it also has the potential to exacerbate skill gaps. This is where the government’s conscientious approach becomes crucial. Investing heavily in apprenticeship programs and digital skilling initiatives will bridge this gap and empower the workforce to harness the power of AI. Direct Benefit Transfers (DBT) for apprenticeships can further incentivize skill development, ensuring that trainees receive financial support directly, making these programs more attractive and accessible. The tourism and aviation sectors are poised for significant growth, with the interim budget of February 2024 laying a positive foundation through increased allocations for tourism infrastructure, aimed at boosting domestic tourism and creating new job opportunities. The aviation sector’s doubling of airports and the success of the UDAN scheme have further solidified this foundation. The new budget is expected to build on these achievements, fostering continued progress and positioning India as a premier global destination.Furthermore, investing in digital public infrastructure and fostering a conscientious approach to skilling and apprenticeships will enable India to partake in a future-ready economy, creating a skilled workforce capable of driving sustained economic growth.
