Union Budget 2021: Fund Allocation for FinTech Sector

Smruthi Krishnan — Sat, 06 Feb 2021 04:18:11 +0000

As our Finance Minister, Nirmala Sitharaman said the preparation of Budget 2021 was undertaken in difficult circumstances. The COVID-19 crisis left the country in a tough spot to revive from. With India already in a slowdown, the economy was pushed into an unprecedented contraction. Surviving the pandemic and moving forward requires a well thought out Budget, one that helps enterprises, companies, producers and consumers recover from the shock. The FinTech sector plays a key role in the revival of the economy especially with its convenience and ease of borrowing, lending and making payments. The Budget has thus stressed upon boosting the digital finance sector in the Post-Pandemic economy. It has allotted Rs. 20,000 crores as capital support to National Banks for Financing Infrastructure and Development.

The FinTech Sector Budgetary Focus Points

Financial Capital Proposals

The committee has proposed to consolidate the provisions of SEBI Act, 1992, Depositories Act, 1996, Securities Contracts (Regulation) Act, 1956 and Government Securities Act, 2007 into a rationalized single Securities Markets Code. The Government would support the development of a world class Fin-Tech hub at the GIFT-IFSC.

Reducing Minimum Loan Size for NBFCs

It is proposed to reduce the minimum loan size eligible for debt recovery under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002 for NBFCs with minimum asset size of `100 crores, from Rs.50 lakhs to Rs.20 lakhs to improve credit discipline while protecting the interest of small borrowers.

Development of Technology

During the coming fiscal 2021-22, the Government will launch data analytics, artificial intelligence, machine learning driven MCA21 Version 3.0 which will have additional modules for e-scrutiny, e-Adjudication, e-Consultation and Compliance Management.

Promotion of FinTech Start-ups

In order to incentivize establishment of more start-ups in the country, the committee proposed the extension of the eligibility period to claim tax holiday for the start-ups an extra year to 31st March, 2022. To encourage more investment in start-ups, they proposed to extend the eligibility period of claiming capital gains exemption for investment made in the start-ups to 31st March, 2022.

Promotion of Electronics and Digital Payments

To promote usage of Digital payments Major Scheme, the committee has allotted an estimate of Rs.1500 crores in 2021 compared to Rs.512 crores allotted in 2020. For the promotion of Electronics and IT HW Manufacturing the budget estimate is Rs.2632 crore in 2021 as compared to Rs.655 crore spent in 2020. Due to a manifold increase in digital payments in the recent past, to boost digital transactions, it has been decided to allot Rs.1500 crore to provide financial incentive to promote FinTech’s in the digital mode of payment.

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Budget 2021-2020: Fund Allocation for Agtech Sector

Kiran Kennedy — Thu, 04 Feb 2021 08:35:02 +0000

The 2021-2022 Union Budget came with several new changes for the economy, especially the Agtech sector by way of budgetary increases to the agricultural ministry, the agricultural sector and allied services as well as major central sector schemes, which together form the foundation for India’s Agtech sector. There was a significant budgetary increase as compared to previous years, with Finance Minister, Nirmala Sitharaman, having delivered the 2021 Union Budget Speech.

The Agtech Sector Budgetary Breakup

The Agricultural Ministry

The agricultural ministry was given a budget expense of Rs 1.32 lakh crores with the breakup being, Rs 1.22 lakh crore being allocated to the Department of Agriculture, Cooperation and Farmers’ Welfare for revenue expenditure and 56 crores being allocated for capital expenditure.

The Department of Agricultural Research and Education on the other hand only received Rs 8,513 crores for revenue expenditure and was given no allocation for the capital expenditure.

Agriculture and Allied Services

The ministry’s budget allocation aside, the agricultural sector and the allied services witnessed a rise in its budget allocation, making the Agtech sector one of the largest funded sectors of the 2021-2022 budget allocation breakup. The agricultural sector and the allied services sector received Rs 1.48 lakh crores for 2021-2022.

The Outlay of Major Schemes

When it comes to the Major Central Sector Schemes, the Agtech sector saw a more specified budgetary allocation towards its efforts and purposes. The budget allocation for the ‘Promotion of Agricultural Mechanization for in-situ Management of Crop Residue’ was Rs 700 crores from last year’s Rs 600 crores.

On the extreme end of the spectrum, the ‘Agriculture Infrastructure Fund (AIF)’, which had seen a revised budgetary allocation in the 2020-2021 budget for Rs 208 crores, saw a drastic spike in the 2021-2022 budgetary allocation of Rs 900 crores.

Another staggering jump in allocation was that of ‘Crop Science’ with a budgeting of Rs 708 crores, a significantly higher budget than last year’s allocation of Rs 612 Crores.

What Agtech Players Can Look Forward to:

During her two-hour budget delivery, Sitharaman also announced an increased allocation of funds to ‘Rural Infrastructure Development Fund’, from Rs 30,000 crores to Rs 40,000 crores. This is a significant development as these investments will increase rural-Agri infrastructure development such as enhanced crop monitoring and post-harvest facilities.

Many Agtech players see the increase in the credit as a sign of good things to come and a larger role for the agricultural and Agtech sectors in the economy.

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