Five Budget initiatives that help India Inc CFOs

Budget 2022 has been unique. The Budget 2022 has to be seen in the context of the parallel track that has been set to achieve a sustainable growth over a 25-year period to 2047, a period that is being referred to as Amrit Kaal. There are five initiatives in the Budget that would help achieve this sustainable growth.

1. Internationalisation of Indian Finance Services industry through the GIFT City

Initiatives around the human capital through investments in education infrastructure in GIFT City, development of a robust international dispute resolution framework and green financing impetus, will help integrate India into the global financial services ecosystem more closely.

This will help enhance investor optimism and help India liberalise the domestic tariff area basis the learnings from GIFT City. It will help build a deeper maturity into the Indian Financial Services ecosystem.

2. Financial inclusion

The financial inclusion agenda is no longer just about social good, but it is also about enhancing the customer base for the Financial Services industry, bringing down the cost of servicing customers, which in turn spurs more innovation and profitability within the Financial Services industry space.

Digital focus on Land Records Management, promotion of use of payment platforms, tax incentives to the start-up ecosystem are some of the examples of how digital changes could enhance the credit, payment, and other ancillary financial service offerings for customers.

3. Addressing key changes in the IBC Code

Cross border resolution framework changes suggested in the IBC Code, will help the banks recover loan dues by seizing assets outside the Indian jurisdiction, help improving bank profitability as most of the bad assets have already been provisioned for. Further, this also enhances the credit risk management framework for the lenders, enabling them to factor in appropriate credit enhancements in their funding decisions.

4. Central Bank Backed Digital Currency (CBDC) roll proposed in 2022-23

Currency management through currency chest services has been one of the most significant operational responsibilities on the banking system.

The central bank-backed Digital Currency initiative helps bring in the much-needed efficiency in the currency management system. However, the most significant benefit is the inherent Anti Money Laundering advantage that it brings with it, on account of the underlying blockchain technology that underpins the CBDC.

5. ESG Focus

The entire budget speech had a key theme of sustainability running across various initiatives around agriculture, mobility, MSME and start-ups. The key requirement for each of them would be financing. The Financial Services industry, both across the Domestic Tariff Area and the International Financial Services Centre-GIFT City, would need to come up with innovative forms of financing across the parameters of tenure, credit enhancements and repayments. With de-regulation as a key theme in the current budget and as well as an expected theme for the foreseeable future, this opens a huge opportunity for the Financial Services industry.

The last word

This budget is a very futuristic one, and it would be right to conclude that the government has not let the political compulsions, colour their long term vision of the country.

This article was originally published on ET CFO.