Budget 2024: 'Expectations from budget anchored in anticipation of policy measures and structural reforms aimed at fostering greater financial inclusion'

Union Budget 2024 Expectations: As we eagerly await the unveiling of the Union Budget 2024-25, attention is firmly fixed on anticipated policy measures that are poised to propel India's economic growth. In the face of diverse economic challenges, including geopolitical tensions and elevated interest rates, the Indian economy stands resilient, steadfastly continuing its remarkable growth trajectory.

According to the International Monetary Fund (IMF), India's GDP is projected to grow at 6.3 per cent in FY2023-24 and FY2024-25, attributed to favorable macroeconomic factors and financial stability. Ashutosh Taparia, Chief Operating Officer and MD - Corporate Coverage of CredAble (a technology-powered supply chain funding solutions company and NBFC), says that this growth is expected to be driven by robust financial inclusion strategies and expansion in the lending markets, marking India's ascent as one of the fastest-growing economies globally.

He says, "Critical to advancing financial inclusion is the convergence of innovative financial service models, with a particular emphasis on lending and reforms in digital payments and FinTechs. The synergy of the elements of traditional finance and new age technology is anticipated to play a crucial role in fueling India's credit cycle and bolstering financial inclusion."

As per the COO and MD - Corporate Coverage of CredAble, the government's commitment to enhancing digital inclusivity — a vital component in catalyzing positive change at the grassroots level — is central to this effort. He adds, "By having already strengthened the regulatory framework for digital lending, the Reserve Bank of India (RBI) has fostered an environment for growth and innovation, aligning with the broader goal of advancing financial inclusion."

Taparia opines that despite the ongoing surge in credit demand, there exists a significant unmet need for credit in untapped segments across the country, and adds, "This gap is attributed to multiple factors such as a perception that such borrowers are high-risk, insufficient traditional data for risk assessments, traditional lending models being focused on collateral based lending and heightened service costs." 

He says Indian FinTech and NBFCs are working closely with Indian corporates and banks to develop models to lend to the previously unbanked sections and to promote financial inclusion. 

Smaller NBFCs, offering transaction-based financing, have gained immense popularity, especially among Micro, Small, and Medium Enterprises (MSMEs). He belives the appeal lies in options such as "lack of collateral required, minimal documentation requirements, a transaction based tenure, e-KYC, and rapid loan disbursement—features that have drawn MSMEs to new age NBFCs to secure credit facilities."

Taparia says that the upcoming budget serves as a vote of account preceding the Lok Sabha elections in 2024, and the expectations are anchored in anticipation of policy measures and structural reforms aimed at fostering greater financial inclusion. "Strong confidence has been expressed in the Indian government's concerted efforts to unlock broader credit access for underserved populations through the implementation of government backed digital lending initiatives. This commitment is reflected in strategic partnerships with FinTechs, banks, and NBFCs, collectively working towards a more inclusive and robust financial landscape," he sums up saying.