Key Takeaways For the Fintech Sector
Fintech was acknowledged for the first time and this indicates that the sector plays a major role in the entire banking ecosystem today
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The COVID-19 outbreak has impacted nations not just on health grounds but even more on economic grounds in an enormous way. It has adversely impacted economies throughout the world. Considering the situation at hand, the Union Budget 2021 seems to be a step in the right direction with a positive intent towards sustaining the economic revival that is happening. The honourable finance minister delivered the first-ever digital Union Budget 2021, with the theme revolving around the vision of "AtmaNirbhar Bharat".
The Budget has allocated a total of INR 30 lakh crore across six main pillars including health and wellbeing, infrastructure and financial capital, governance and others. COVID-19 has accelerated the speed of digital acceptance across various facets of business and life and several encouraging announcements made especially pertaining to technology sector are very welcome. Fintech was acknowledged for the first time and this indicates that the sector plays a major role in the entire banking ecosystem today. The announced budget will help sustain the economic recovery with a clear focus on growth.
The few key takeaways for the fintech sector are:
The fintech hub at GIFT City
Developing a world-class fintech Hub at GIFT City will go a long way in stimulating, advancing and developing fintech startups. It would help in providing a platform to the fintech firms to expand globally and will help generate employment and attract quality talent in the country.
INR 1,500 crore earmarked for scheme to incentivise digital payments
The proposed scheme is a very positive indicator of development of a digital-first future in line with the PM's Digital India Mission. This will encourage and uplift the next generation of tech companies to step up, innovate and pioneer. With the ongoing chaos of the global pandemic, digital payments and fintech was one sector, which witnessed record highs in 2020 as a large number of people preferred to stay at home and to minimise social contact. Physical cash handling became a concern for risk of contamination; hence the digital payments sector saw good growth in the past year. The proposed scheme will make it better and preferable.
Launching data analytics, AI, ML driven MCA21 3.0
MCA-21 will be crucial from the startup point of view and will include additional modules for e-scrutiny, e-adjudication, e-consultation and compliance management. It also shares crucial information to various stakeholders such as the regulators, investors and companies. Through this, measures will be taken to deploy deep analytics and artificial intelligence used to identify tax evaders and fake billers. This step will not only strengthen the government's initiatives such as AtmaNirbhar Bharat, Make in India, "Digital India, but will also increase employment opportunities in India.
INR 15,700 crore to subsidise the MSME sector
The thrust on boosting the MSME sector with allocation of INR 15,700 crore is a good move which will enable them to strengthen their positions. The MSME sector has been vastly affected during the coronavirus pandemic.
From the BFSI standpoint privatisation of one General Insurance PSU and the IPO of LIC will be watched closely. The allocation of INR 20,000 crore for recapitalisation of public sector Banks and set up a "bad' bank to remove toxic assets will go a long way in strengthening the banking system. Increasing the FDI limit to 74 per cent and to allow forming one-person company (OPC) are also good for fostering entrepreneurship.