Union Budget 2023 and Its Impact on Startups

Dr. Ganesh Natarajan, Advisory Committee Member of India FinTech Forum and Chairman at 5F World, welcomed the union budget 2023 and said, “It’s a pragmatic and fiscally prudent budget and will surely set India on track to “Amrit Kaal”. FM has emphasized the importance of the finance sector and specifically called out fintechs. Widening the scope and content of Digi lockers will enable more collaborative applications to emerge. Accessing credit has also been made easier for SMEs and my belief is that accessing capital depends on the strength of the idea and a robust business model. All in all, an excellent budget.”

Mr. Alok Mittal, Strategy and Policy Committee Member of India FinTech Forum and Managing Director, Indifi Technologies shared his insights on the impact the growth and development of fintech startups in India. He said, “The budget has made certain announcements regarding creating a more robust data infrastructure in the country, for the purpose of financial inclusion. There is a proposal to expand the scope of services in digilocker and provide access to fintechs. One of the key areas of friction that remains in financial inclusion is KYC for MSMEs and we hope that this expansion in scope includes MSME KYC related elements, alongwith the required regulatory recognition of those mechanisms. Similarly, the announcement of National Financial Infrastructure Registry promises to streamline consent-based availability of financial information, thereby widening credit coverage. In line with the prior RBI’s intent of promoting the Public Credit Registry, we hope that real time credit information will be an integral part of NFIR.”

• Will the budget address the challenges faced by startups in accessing capital and credit?

Mr. Rahul Jain, IFTA Committee Member, also shared his views on the Union Budget 2023 and said, “The Honorable Finance Minister has tabled a budget which truly represents New India. Thrust has been provided on catalysing robust growth across sectors and digitisation is at the centre stage of all development related initiatives. This budget has given impetus to some of the most emerging sectors such as Green Energy, EV and Emerging Technology, Agri Tech, and Fintech among others. Announcements on enabling more innovative fintech-driven services, simplifying KYC and expanding Aadhar, Digilocker, UPI etc. clearly lays the foundation of expanding the fintech footprint across Bharat. In the last couple of years, the Indian economy has become more formalised as witnessed by the significant enhancement in digital payments. Hon’ble FM has signalled the governments intentions in driving further innovations for the overall startup and fintech ecosystem which in turn will catapult the Indian economy to greater heights. Also, this year’s budget has reiterated the Government’s commitment in making India as the most startup friendly destination through the extension and introduction of various taxation benefits for the sector. Besides the proposed introduction of National Data Governance Policy will definitely simplify data governance processes and enhance individual user protection which is extremely critical and an absolute need of the hour.”

Mr. Prasanna Lohar, Executive Committee Member of India FinTech Forum commented on the union budget 2023 saying that, “Fintech is now an integral part of Banking and Finance. We should see how customer experience can go to the next level with the collaboration among Regulators, Banks, and Fintechs. There are many areas in India to be nurtured with Fintech around regulation, API Standardization, Platforms Consolidation, Payment experiences, and Use Cases. While State Governments, Investor Communities, Banks, RBI, and other regulators are driving many fintech Initiatives. It’s High time for India to have Fintech Officer & National Fintech Policy. This Budget should give the right direction to Fintech Acceleration Momentum.

• • Simplifying KYC process: The KYC process will be simplified and more personalized instead of a “one size fits all” approach.
  • A new solution for updating the identity and address of citizens will be established using DigiLocker and Aadhaar framework.
  • DigiLocker documents scope being expanded to enable Fintech services.
  • Entity-based DigiLocker service will be launched for MSMEs, large businesses and charitable trusts.
  • National Data Governance Policy will be set up giving access to anonymized data
  • Make AI in India and Make AI work for India will drive AI Adoption in India
  • Pradhan Mantri Kaushal Vikas Yojana 4.0 is to be launched with courses on Industry 4.0 like coding, AI, robotics, mechatronics, IoT, 3D printing, drones and soft-skills.
  • 5G services: 100 labs to be set up in engineering institutions to develop applications like smart classrooms, precision farming, smart transport system and health care applications.