The announcement of the Union Budget is a much-awaited event every year. After all, this single announcement defines the earnings of every individual and industry alike. With the new budget announcement just around the corner, every sector has its own set of expectations from the government in terms of policies, tax benefits and more. 

The new-age financials segment is no different, largely due to its customer base which mostly comprises micro, small and medium enterprises (MSME), a sector that accounts for almost 30 per cent of the country’s GDP and 45 per cent of total employment. It is, therefore, only natural that these interconnected segments hold high expectations from the Budget 2023.

While the cash-strapped MSME sector has the most job creators, developing products and services that improve and add value to people’s lives across the country, it has faced persistent hardships for several years in a row. 

In the budget for the current fiscal, the government had offered an additional loan under the Emergency Credit Linked Guarantee Scheme (ECLGS) for 130 lakh MSMEs. However, as a primary driver of India’s growth as the world’s fifth-largest economy by 2025, MSMEs certainly require a lot more. And as the propellants of MSMEs, so do non-banking financial companies (NBFCs), a large number of which are making use of technology to bring smaller business into the fold of financial services.

To provide a boost to the sector, the Government can consider including the MSMEs under the Production Linked Incentive Scheme (PLI). 

The schemes were launched with an objective of increasing production, building competitiveness, creating jobs and also to lay the foundation for creating champions in the sector. Extending these schemes for 60 million businesses in the underserved segments will not just speed-up their progress but also help unleash the potential these businesses hold in being the game changer of economic growth for India.

Non-Banking Financial companies (NBFCs) have been a strong stimulus in propelling faster economic growth by providing easing access to formal credit and enabling inclusive growth in India. It is, therefore, imperative for the government to bestow greater consideration upon the sector while announcing the Union Budget 2023. 

Bolder steps are required to increase the flow of funds to NBFCs, especially the ones working toward empowering and financially including the micro and small businesses, which are considered higher risk and remain underserved even through financial and technological interventions.

The fintech sector has grown to become one of the fastest-growing segments in technology transforming the entire landscape of financial services in the country. With India poised to achieve the USD 5 trillion mark by 2025, digital financial services are expected to grow further, largely due to the easy access they provide to a majority of India’s population and small businesses. 

Fintech firms, therefore, expect the Budget 2023 to ease the financial burden for startups in the sector through policies aimed at promoting collaboration between loan providers and banks to bring the people in India even closer to financial offerings, whether for business or personal purposes. Having democratised financial services in the country, the sector hopes that the government will recognize its role in bringing financial products closer to millions, thus helping them fulfil their dreams.

We are positive that the Budget 2023 will bring in a period of progress and prosperity for all sectors with policies and regulations that support holistic growth of the economy.