Union Budget Wish List for the Indian Fintech Sector-Kunal Jhunjhunwala

In the last decade, the importance of the Union Budget has declined as managing a growth-driven economy requires frequent reforms and initiatives. For a country on the brink of being the most populous nation globally, with one of the largest working age populations, improved social metrics and low per capita credit access, the focus has been on developing a sustainable, formal, affordable and inclusive financial services ecosystem . A flurry of reforms has already hit the financial services, and the fintech sectors are putting out last year’s budget, namely regulatory, compliance and transparency measures. Growth has been a 365X24 hour agenda for a nation on its way to becoming a USD 10 trillion economy. Therefore, my budget wish list may not be limited to budget day but may be revealed over the next few months.

1. Disruption without a roadmap destroys: Nothing hurts more than the intention to do good in bits and pieces. Since fintech is a nascent sector, still learning the ropes, fintech needs to be nurtured consistently. Without sharing the big picture, arbitrary changes in tranches harm business continuity. While I am sure fintechs love to embrace disruption as they accelerate their growth trajectory, there is a real need for clarity from the Government of India on their vision around the regulatory compliance roadmap. More importantly, once the clarity is conveyed, due time must be given for adoption.
   
2. Reward the deserving: UPI has become the country’s gold standard for real-time contactless payments. Over the past few months, the Indian government’s cornerstone of Digital India has found much-deserved acclaim in the global media and corridors of power. As the government starts the global rollout of UPI as the next chapter of growth, I wish that the UPI incentives will continue for a long time. In other words, the core implementers of an ambitious scheme (read as fintechs) should be given their reward in the form of incentives and refunds from banks. This will further strengthen the partners’ commitment to helping the government achieve its next big hairy bold goal in the future. On the other hand, the incentives will also ease the path to profitability for fintechs.
3. Make (IT easy) in India: Fintechs find it easier to understand the bleeding edge technology, but extremely difficult to decipher the income tax. As an Indian, I am proud to acknowledge that the ease of doing business has seen a welcome change. However, some issues, mainly taxation, remain an eternal bane. My third wish is – uncomplicated taxation for new age businesses. I am quite sure that the questions on the mind of the Honorable Finance Minister will be how to consolidate, optimize or rationalize multiple taxes. Given that GST poses a significant cost to service providers, especially in the absence of GST inputs, there is an urgent need to reduce the tax bracket. The reduction in GST rates for service providers will have a positive domino effect in accelerating affordable financial inclusion for millions of Indians.

To round off my wish list, inclusion cannot be achieved without stimulating the process. Take investments and how a sustainable and scalable market was created using tax incentives and exemptions. Such incentives and exemptions need to be rolled out strategically across the credit and investment cycles of small-ticket consumers and facilitators for India to become a genuinely inclusive and dominant growth-led economy in the next decade.