Budget 2024 Expectations: India's interim Budget will be presented on February 1. The Government is expected to recognize the potential and challenges of the FinTech and give an ecosystem to support and enable it to operate in a better way. Finance Minister Nirmala Sitharaman's sixth budget is expected to focus on two key areas: NBFCs may get some liquidity enablement and green energy involving Suryodaya Yojana will be in focus.
#budget2024 #interimbudget #indianeconomy
#incometax #taxbudget #nirmalasitharaman #lokdabhaelection #budgetexpectatations #bankingsector #budgetforwomen #budgetforfarmers #budgetforagriculture #railwaybudget #budgetsharemarket #realestatebudget #housingbudget #housingschemes
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#budget2024 #interimbudget #indianeconomy
#incometax #taxbudget #nirmalasitharaman #lokdabhaelection #budgetexpectatations #bankingsector #budgetforwomen #budgetforfarmers #budgetforagriculture #railwaybudget #budgetsharemarket #realestatebudget #housingbudget #housingschemes
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NewsTranscript
00:00 Hello and welcome to GoodReturns. We have today with us Aditya Damani, CEO of CreditFair.
00:06 Mr. Damani, warm welcome to you. Thank you for joining us.
00:09 Thank you so much, Shruti. Glad to be here.
00:13 Let me start by asking the most obvious question that what is probably expected
00:19 out of this budget? What is your expectation, your thoughts?
00:21 Right. So I think the government has been good about balancing fiscal discipline while
00:29 also focusing on building the nation. So there will be, I'm sure, more of a focus on infrastructure,
00:37 on the employment creation to agricultural sector, maybe some benefits there, and hopefully more
00:46 divestment as well to kind of generate more revenue for the government. The stock market
00:51 has been doing very well for the last one, one and a half years. So I think that should give a
00:55 good opportunity to the government to raise more money through divestment, hopefully. And I think
01:02 for kind of controlling inflation and maybe also balancing that with growth. So we are hoping,
01:12 in terms of fintech and for NBFC sector, that there will be some more liquidity
01:17 enablement by the government. So those are the broad things I would expect.
01:24 And actually, one more thing I would like to add is on the environment and green energy part,
01:30 you know, with the Prime Minister announcing the Surya Day Yojana and trying to solarize
01:36 one crore homes. So I would hope to see some more things there as well.
01:40 You spoke about, you know, green energy and climate change. Now, India is expected to meet
01:46 its net zero target by 2070. That is a little late from what other developed countries are
01:55 probably aiming. Any thoughts on that? Yeah, so I think, you know, India is at a very different
02:00 stage compared to a developed economy. Our population still has to move up, I mean,
02:06 move out of poverty, right, like a large part of our population. And per capita,
02:12 our pollution is still not very high. So I think, yeah, I mean, we are looking to set
02:21 maybe more realistic targets for 2070. But I feel the government is trying its best to
02:26 maybe even pre-pone the deadline over time. Because, you know, we rely a lot on foreign
02:33 oil. So it is in our economic as well as social interest to improve the, I mean, reduce the
02:42 pollution and everything that we're doing. So yeah, I feel we are capable of maybe even
02:48 making it 2050. But yeah, ultimately, we don't want to rock the economic boat, you know, like,
02:57 let's make sure first we get people to a good level and then focus on reducing the pollution as
03:02 well. Right. Interesting. So let's talk a little bit about the economy before we talk about fintech
03:11 probably. Prime Minister Narendra Modi has already said that, you know, we are going to be the third
03:17 largest economy in the world, will be a $5 trillion economy very soon. How do you think,
03:24 you know, the lending platforms will contribute to this growth rate? Right. So I think, you know,
03:33 in a country like India, where there's such a big young population, typically, their incomes are not
03:40 are keeping pace with their aspiration. So that's where the need for finance and lending will
03:47 always be there. You know, we are a consumer and consumption driven economy and without having
03:54 adequate finance, both for consumption as well as for now the capex growth that we're expecting in
03:59 MSMEs and corporates, there will have to be good flow of credit. Within that, I feel fintechs will
04:06 contribute obviously a lot more for consumer and for MSME. And I think the focus will be a lot more
04:12 on MSME sector, as well as green energy, like I mentioned, or other priority sector lending.
04:18 Since, you know, the RBI is very keen that consumption growth and personal loans should
04:25 be a little bit more moderate. So I think all the fintechs will focus a bit more on the whole
04:30 priority sector lending, which would be affordable housing, MSMEs, agri or, you know, green energy.
04:37 Absolutely. And as fintech, as a sector is emerging, as an important stakeholder in providing
04:46 financial services, do you expect any kind of measures in the budget that could boost,
04:52 you know, suitable incentives for the industry? You know, what is your overall
04:58 growth projections for this year for the sector? So I'm not sure, specifically, if anything will
05:04 come for fintech, like I haven't seen it before. So not keeping my hopes high on that front. But
05:10 yes, I do hope that for the NBFC sector in general, that, you know, there should be more avenues
05:17 opening up to raise debt. You know, I think RBI wants to reduce the amount of liquidity from banks
05:24 towards NBFC. So hopefully, through the bond market is something that I would expect that
05:32 the government will try to facilitate more on corporate bonds on other forms of borrowing,
05:38 which is more directly from the investor to the NBFCs. And that should help the sector with better
05:45 liquidity. And then coming to your growth, I mean, the question about growth projections. So,
05:52 you know, we expect the Indian economy to grow at 7% in real terms. If you add inflation of,
05:57 say, 5-6%, that would be at least 12-13% growth for the economy. And I would expect the fintech
06:03 sector to at least grow double that. So probably 25% growth is at the minimum what I would expect
06:10 for the fintech sector. Right. Now, Mr. Damani, you spoke about, you know, your expectations for
06:19 the growth rate is 7%, 5-6%, you know, moderately, slightly high inflation. But if you look around
06:30 the world, then most of the developed nations are actually facing higher inflation, although most
06:35 central bankers said that inflation would be transitory for a long time. You know, US faced it
06:41 and the Fed had to raise its interest rate much higher. We could say that, you know, India is in
06:49 a much better position as of now. However, do you expect inflation is has slightly cooled off,
06:55 but do you expect it to, you know, go up again later in the year, depending probably on monsoon,
07:02 etc. And if the RBI keeps repo rate at 6.5%, it will probably have an impact on personal loan
07:12 interest also. Right. So what are your thoughts on that?
07:15 I think the government has done a great job of managing inflation in India. And in terms of
07:25 just overall increasing the supply of things. So because of having a good growth in the economy
07:34 and good growth on the, you know, manufacturing production, so the prices haven't been rising as
07:42 fast in India as compared to the global economies. So I think it should hopefully stay around here
07:50 anywhere 5 to 7% range, you know, is the level of inflation I would expect. Of course, food inflation
07:58 is hard to predict. But apart from that, I think we should be in a stable inflation environment.
08:03 Even oil prices have been quite stable. And there is more talk of, you know, let's say the Israel
08:11 Palestine war kind of ending as compared to the chances of things escalating further. So I do feel
08:19 inflation should hopefully remain in control. And with that, RBI will probably also hopefully just
08:26 maintain rates and hope towards the second half, there could even be a chance of reduction of rates
08:32 is what I feel. Even in the US, there has been a lot of inflation, but still there is now expectation
08:40 of a cut in rates in the next, you know, like within the next one year. Right, right. That was
08:46 my follow up question, actually, that, you know, we have just opened our RBI poll and economists
08:52 and analysts across India are saying that, you know, probably next month RBI is going to keep
08:59 repo rate unchanged. And later this year, there could be a rate cut. So I'm assuming that you
09:06 know, you have the same stance. I agree. I think next meeting should be a hold. There should be
09:11 cannot expect much changes. It might be maybe at least six to nine months before any rate cuts
09:18 start happening. What do you believe that the NBFC sector needs for better growth and better credit
09:24 cycle? For the most part, now, it's just about more affordable cost of funds. There is a bit
09:33 of margin pressure because rates have gone up. And liquidity is also moving a bit tighter. So
09:40 I think having that balance where even if cost is a little high, but a bit more easily available
09:47 liquidity would be good for the NBFC sector. And secondly, I think it's about just overall,
09:57 overall in the debt markets, I say, I would say, so you know, the equity market has a lot of
10:02 incentives, people get a lot of tax benefits on investing in equities, but no country has become
10:08 a superpower without having a very deep and liquid debt market. So I think that would be great if
10:14 the government can encourage more of a debt market in India. And usually debt markets are double or
10:20 triple the size of the equity market, actually. So whereas in our case, we're probably half the
10:25 size. So apart from government bonds, there should be like a much bigger, much wider traded
10:31 or corporate and even high yield and NBFC debt market. And I think,
10:36 yeah, that would be great for boosting the sector.
10:40 Sure. I have a few last questions, Mr. Damani. And I have an interesting question, actually,
10:50 which was sent by our senior subeditor, Pooja Jaiswal, who follows credit fair very, very closely.
10:56 So she's asked that, you know, in recent times, credit fair has collaborated with energy and solar
11:03 companies to provide solar financing and solar rooftops. So what do you think about
11:08 Pradhan Mantri Solar Panel Yojana 2024? And how will it drive India? Does credit fair has any
11:16 opportunity to probably benefit from this and you know, your overall thoughts on this?
11:25 Okay. Yeah, thanks, Ms. Pooja for following us. And the focus for us has been a lot more on green
11:33 energy over the last year or two. We see this as a, you know, very unique opportunity because
11:39 the awareness is increasing a lot about solar as well as about saving the environment. The number
11:48 of people who can do these installations and the number of qualified, you know, manufacturers is
11:54 growing tremendously. And finally, for finance, you know, there's people like us coming in to
11:59 make the whole process easier to make it more affordable and accessible. So yeah, we think that
12:06 this is a great way that, you know, ultimately, it's about making India so but why not just make
12:12 power at your home and cut your electricity bill. So we've been able to help over 2000 borrowers
12:20 already 2000 customers rather I should say. And this has been almost, you know, like over 11 megawatts
12:28 of power that is being generated thanks to the funding we provided. Just to start, we're helping
12:35 customers save over one crore monthly in electricity bills. So we think this is a great opportunity for
12:41 a company like credit fair where we can help the environment, we can help the borrowers with,
12:46 you know, reducing their financial liabilities, and ultimately, be able to so you know,
12:55 many pockets of the country, like we are looking to serve at least solar in 10 states currently,
13:02 and hopefully expand that over time. Are you focusing on, you know, more of rural area
13:10 for this or is it the urban area that you're targeting? Right now, it's more of the tier two,
13:16 tier three cities. So you're not targeting like the metros, whether Bombay, Delhi, etc, because
13:22 typically, this would be someone was a standalone home, and or a small factory or a school or a
13:29 hospital, you know, those are the target consumers for us. And usually a bungalow or a small house
13:38 would be more in let's say, Nasib or Indore or Jaipur. So we're going more after the tier two,
13:43 tier three cities. And over the next one, two years, we would also like to go more rural. So
13:48 we have done, you know, loans in as small parts of like a village near Varanasi or Lucknow,
13:58 there's a place for Lakhimpur, for example. So we do want to get to that last mile. But
14:04 right now, our focus is a lot more on tier three cities.
14:08 Right. So I think that's a very noble cause too. Because especially in villages and you know,
14:16 in smaller towns where agriculture is the main way of earning, I think solar power can help a lot.
14:23 So thank you for that. Just one last question. I heard you spoke about stock market. And you know,
14:31 there are so many, sometimes external factors also impacting the stock market, even if like,
14:38 for example, the war between Russia and Ukraine or Israel and Palestine, or the risks from China,
14:46 probably China's real estate sector impacting the Indian stock market. But then we have the
14:53 looks of elections. So any thoughts, any, you know, expectations on how the stock market will
14:59 perform this year? Yes, I think it's very difficult to predict the stock market,
15:07 where it goes, I can just talk about the broad direction. I think broad direction,
15:11 everything is positive, like India is uniquely positioned because, you know, like you said,
15:17 China's having its own crisis. So everyone is looking for an alternative, whether abroad or in
15:22 India, where they can put their money in. And I think the best part is now, the domestic money is
15:29 actually a bigger factor than the foreign money. So I think that just makes it less likely for the
15:37 stock market to go down, because there's so much savings, so many investors looking to deploy their
15:43 funds, and everyone feels very comfortable with the stock market. So I would say broadly,
15:48 the direction is up. I do feel the valuations might be quite high in many stocks. So it is
15:54 going to be probably very stock select, you know, very selective stocks might go up. But
15:59 yeah, I think the trend is up. And probably at the end of the year, also, we should
16:04 go there. I think the Lok Sabha part, maybe it's factored in because after the assembly elections,
16:12 you know, now everyone is expecting the current government to continue. So it's more like if
16:18 there's an upset in the elections, then the stock market might go down. Otherwise,
16:23 things should be stable to have. Thank you so much, Mr. Damani for joining us. Thanks for
16:28 having me on the show. That was Mr. Aditya Damani, CEO of Credit Fair, talking to us with good returns.