Why Fintech May Get a Boost in Union Budget 2025: Everything You Must Know
Reviewed by: Fibe Research Team
- Updated on: 31 Jan 2025
- Published on: 18 Jan 2024
Reviewed by: Fibe Research Team
With the Union Budget 2025 knocking at the door, massive speculations are arousing in all sectors as to what this budget will offer. This year’s budget is expected to be focused on promoting economic growth, unveiling targeted reforms, and boosting investments in critical areas, ensuring long-term development and financial inclusion. In addition, many sectors expect to get a tax relaxation from Nirmala Sitharaman.
Nonetheless, experts from various sectors expect big movements in the new Union Budget, especially in the fintech sector. The fintech market is one of the biggest growth drivers of the Indian economy, which is expected to report the highest growth among 13 large economies included in Goldman Sachs Research’s global outlook. So naturally, many are expecting the sector to witness a boost with the Interim Budget.
To know more about why the fintech sector may receive incentives and additional support in the Union Budget 2025-26 and what are the 2025 budget expectations, read on.
The following are some of the prominent positive indicators of why the fintech sector may get a significant boost in the 2025-26 Budget presented by Nirmala Sitharaman:
In the previous budget, Nirmala Sitharaman eased regulatory norms to promote the use of Digilocker for documentation. The expansion of these services also proved to be a great boost for individuals and financial service providers.
It was also announced that the government will set up 100 labs in engineering institutes for developing apps for 5G services. This will help Indian fintech companies to explore new possibilities. With this support from the previous Budget, the sector is expecting the same from the upcoming one.
In the Union Budget of 2021 and 2022, the government extended financial support of ₹1,500 Crores to build digital payments infrastructure; but the same was cut down nearly 40% in the interim budget of 2024. However, the volume of digital payments has witnessed a steady CAGR of 44% from the financial year 2017-18 till FY 2023-24. The volume of digital transactions increased from 2,071 crores in 2017-18 to 18,737 crores in the financial year 2023-24.
Based on the steadily increasing allotments for UPI infrastructure in every year’s union budget, the fintech sector can expect another boost for the digital payments sector, especially for the UPI infrastructure.
DBT was introduced to prevent leakages in transferring benefits of various schemes. Under this, the transfer happens directly to the beneficiary’s Aadhaar-linked bank account, with no intermediary. Fintech plays a crucial role in this, its development in underserved and unserved areas can enable a wider reach. Hence, leaders of the sector are expecting this year’s Union Budget to equip fintech companies with the support required to promote their services in Tier 3 cities and rural areas.
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The Indian fintech space has witnessed one of the most fast-paced growth in the world with more than half of the startups founded between 2016 and 2021 being fintech companies. So, the expectations from the budget are in line with the growth and how to further propel it.
Ashish Goyal, Co-Founder and CFO of Fibe has shared his expectations from the upcoming Union Budget in this regard. “Empowering the entrepreneurial spirit is the cornerstone of economic growth and in the upcoming Budget, we anticipate strategic measures to foster a robust entrepreneur ecosystem. We expect the Government to remain a key catalyst in developing the startup ecosystem.”
Hinting at the regulatory reforms introduced last year, he said, “The Government has undertaken several security measures to ensure consumer protection while accessing finance online and we expect a regulatory framework to restrict illegal lending by unauthorised players to further strengthen the ecosystem. We hope that the Government continues to expand the digital infrastructure to support deep penetration of financial services which reduces the cost of delivery of services.”
“ONDC (Open Network for Digital Commerce) and OCEN (Open Credit Enablement Network) shall be supported to create incentives for investment in technology and R&D to ensure this. We also urge the Government to consider the implementation of a uniform KYC framework across all financial services that will not only enhance efficiency but also bolster financial inclusion. This measure aligns with our collective vision for a digitally empowered and financially inclusive India, driving economic growth and encouraging a responsible lending and borrowing ecosystem,” he added, on other measures that the government can announce in the Union Budget.
The government, in the past Union Budgets, introduced regulatory frameworks that allow for innovative fintech services with an aim to easily increase financial inclusion and improve service delivery in underserved areas. Fintech expects that the upcoming Union Budget 2025-26 will maintain the momentum for the promotion of digital payments and deepening financial inclusion. The fintech sector expects some ease in regulatory frameworks, incentivisation of digital adoption, and improving access to credit for MSMEs.
These steps are likely to ensure that fintech continues to be a growth catalyst for India and sets the path for a genuinely booming economy.
