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Business News/ Opinion / Towards a digital future

Towards a digital future

Tackling employment needs by specific interventions on the demand and supply sides are noteworthy

Pradeep Gaur/MintPremium
Pradeep Gaur/Mint

The Union Budget 2017-18 will help propel the country towards a digital future with the finance minister leveraging the digital theme in every part of it. Everyone, from a small shop owner to a consumer, is being pushed towards the digital economy and I believe the benefits of this push will help build a stronger and more inclusive economy.

Providing universal access to financial services beyond just banking will get a fillip, as will internet infrastructure via increased allocation to high-speed broadband projects, providing broadband access in 150,000 gram panchayats and the DigiGaon initiative. Introducing a Payment Regulatory Board under the aegis of the Reserve Bank of India (RBI) will provide much-needed guidance to the fast-growing payments sector.

Accelerated adoption of digital payments is likely given multiple initiatives. Digitization of all consumer-to-government payments demonstrates the government’s resolve to reduce reliance on cash. The target to provide 1 million PoS terminals and 2 million Aadhaar-based payment systems to merchants will add a large number of merchants to the ecosystem. Initiatives to promote the Bharat Interface for Money (BHIM) app will also encourage the cashless move. Removing service charges from Indian Railway Catering and Tourism Corporation (IRCTC) bookings is another such welcome step.

Another benefit is that we will have a digital footprint for even the unorganized sector. This footprint can help provide loans and other financial products to those who were previously excluded from the mainstream financial system. The encouragement to SIDBI will again lead the way for other institutions to create innovative financial products that leverage the public infrastructure like Aadhaar and help improve lives.

Tackling employment needs by specific interventions on the demand and supply sides are noteworthy. On the demand side, incentives for labour-intensive sectors—ranging from footwear to housing, commitment to reforms to streamline labour laws and easier access to credit for SMEs via MUDRA—will help accelerate job creation. Increased budgetary allocations for higher education, the specific focus on skill development will all help in the employability of our youth, boosting the supply side. I am optimistic that this coordinated approach will help translate our favourable demographics into higher output.

Mainstay infrastructure investment, including railways and roads, has also received a substantial increase with coordinated spending likely to increase the impact. All these public investment increases have been done while keeping the fiscal deficit low. As a result, interest rates are likely to stay low. Measures taken to alleviate the NPA stress in banks and improve capitalization will enable banks to lend more. As a result of all these factors, private investment should also increase from current levels.

Finally, the adjustments to income tax rates will encourage more people to report their incomes and expand the tax net. For the informal sector, presumptive taxes have been made more favourable and easier to comply with. As a result, more people and businesses should enter the formal economy.

I view this as a good budget and would rate it 7.5/10. By choosing incremental rather than large-scale reform, the finance minister has preferred to provide policy certainty—a welcome development in an uncertain global environment.

Vijay Shekhar Sharma is founder and CEO, Paytm.

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Updated: 02 Feb 2017, 11:17 AM IST
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