Budget 2021: Digital payments get Rs 1,500Cr scheme; fintech gets new hub in Gujarat

FM Nirmala Sitharaman proposed a Rs 1,500 crore scheme to develop, promote, and accelerate digital payments in India, following the sharp rise in online payments during the COVID-19 lockdown.

Finance Minister Nirmala Sitharaman on Monday proposed a Rs 1,500 crore scheme to develop, promote, and accelerate digital payments in the country, following the sharp growth in online and contactless payments during the COVID-19 led lockdown months.

"To give a further boost to digital transactions, I earmark Rs 1,500 crore for a proposed scheme that will provide financial incentive to promote digital mode of payment," she said, presenting Union Budget for the 2021-2022 year.

The finance minister added that a 'world-class' fintech hub at GIFT City (Gujarat International Finance Tec-City) — located on the banks of the Sabarmati River — will be set up to encourage and develop innovative financial technology services and products.

The hub will help create around 1.5 lakh jobs for the youth.

The government also proposed a bill to set up development financial institutions with an outlay of Rs 20,000 crore in a bid to boost loan access for SMEs and MSMEs, and businesses working in the manufacturing and infrastructure sectors. This will help address the gaps in financing facilities for long-term infrastructure projects.

The DFI will also have statutory backing and a capital of Rs 27,000 crore. It will aim to have a loan portfolio of Rs 5 lakh crore over the next three years and will be professionally managed.

"I believe the Rs 1,500 crore incentive announced will open a plethora of opportunities for fintechs to innovate for the new normal, leading to large scale adoption even in the smallest of towns and villages. I'm hoping the funds will be used towards developing alternatives to Zero MDR policy and initiatives towards bringing digital financial literacy in vernacular languages. These will instil trust in the system and accelerate adoption from MSMEs and entrepreneurs who are apprehensive towards moving money digitally," said Harshil Mathur, CEO and Co-founder of Razorpay.

This year's first-ever paperless Budget is considered one of the most crucial ones in modern India’s history as the country attempts to recover from the aftereffects of the COVID-19 pandemic.

"Only three times, the budget has followed a contraction in the Indian economy," Sitharaman said in her opening remarks.

The finance minister emphasised the efforts made by the government to bolster the economy, highlighting the Aatmanirbhar Bharat package and other post-COVID-19 economic relief packages for all sections of society. She said these were like “five mini Budgets" in themselves, adding that the Union Budget is now an extension of the same effort.

For YourStory's multimedia coverage of Budget 2021, visit YourStory's Budget 2021 page or budget.yourstory.com.

Edited by Suman Singh