The alternative lending sector is maturing very rapidly in India. With the technological expertise that the sector possesses, it has been effective in eliminating red-tapism and has been bridging the financing gap that the MSME space and the consumer finance industry face. It has also enhanced loan disbursement processes in banking institutions, thus increasing the scope of financial services in the country. A favourable budget will further increase the extent of these operations and will pave the way for double-digit growth of the Indian economy. These are the expectations of the alternative lending sector from the upcoming Union Budget:
Credit Guarantee fund Trust for Micro and Small Enterprises (CGTMSE) pool expansion
CGTSME pool expansion will facilitate higher fund movement to the SME sector and will enhance prospects for the industry. It will also allow fintech corporations to boost their activity and devise more industry-centric services. The SME sector, at present, is estimated to contribute close to 45% to the GDP and generate over 8 crore jobs in India. However, facing a credit deficit of Rs 2.93 trillion, the sector is yet to reach its true potential. CGTSME pool expansion will be pivotal in decreasing this financial gap and driving growth for the sector.
Lower tax rate, higher compliance
The government must ensure higher tax compliance through friendly administrative policies. Additionally, it must compile data to create a track record of working professionals and business entities and use it to enable easy access to funds. Tax rate must also be lowered; doing so will stimulate the country's consumption rate, subsequently increasing revenue generation through indirect taxes.
Post-demonetisation, digitisation has emerged as one of the key focus areas for the government. The impetus, therefore, must be on driving internet connectivity and digital adoption through government-led initiatives. Additionally, in order to accelerate the digital migration, the government must fund special projects to drive digitisation and API-based usage.
The government must also speed up its Udhyog Aadhaar initiative and increase its purview. Digitising registration processes, state-level registrations, departmental records, tax data, and real-estate records for governmental departments will add greater thrust to the overall digital adoption. Account aggregation must also be enabled for businesses.
Infrastructure for Start-ups
As an increasing number of start-ups emerge pan-industry to solve an array of industry-specific problems, it has become essential to further develop the infrastructure to promote their growth. The government must therefore ensure the development of new IT parks with high-speed internet and other essential amenities in order to foster greater innovation.
(The author is CEO& CO-Founder of CoinTribe)