Union Budget 2023: Banking & Finance Sector

India’s banking and finance sector is eagerly awaiting the Union Budget 2023, set to be presented on February 1st, 2023. The sector has been hit hard by the pandemic and the budget is expected to announce measures to support the sector and to lay out a roadmap for its growth and development in the coming fiscal year.

One of the key expectations of this budget is to address the issue of non-performing assets (NPAs) in the banking sector, which has affected the ability of banks to lend and support economic growth. The issue can be addressed by the government through measures such as creating a government-backed asset reconstruction company to take over and manage bad loans.

Another major expectation from the budget is to have measures to support the Small and Medium Enterprises (SMEs) sector, which too been hit hard by the pandemic is looking up to the initiatives by the government. There can be several measures by the government like providing credit guarantees, tax incentives, subsidies, and other measures to help the SMEs to survive and grow.

The government is also expected to announce measures to promote digital banking and financial inclusion in this budget. Digital banking has become more important than ever during the pandemic and the government is expected to announce plans to increase the number of digital transactions, provide subsidies for digital banking infrastructure, and to provide tax incentives for businesses and individuals who use digital banking services.

The insurance sector is also expected to receive attention in this budget. The government is expected to announce measures to increase the penetration of insurance in the country, such as providing tax incentives for individuals who purchase insurance policies, and to provide subsidies and other measures to support the growth of the insurance sector.

The budget is also expected to have measures to support the mutual fund industry. The government may announce measures to increase the penetration of mutual funds in the country, such as providing tax incentives for individuals who invest in mutual funds, and to provide subsidies and other measures to support the growth of the mutual fund industry.

Overall, the Union Budget 2023 is expected to provide a comprehensive plan for growth and development while balancing the need for stimulus to revive the BFSI sector, with the need for fiscal discipline to keep the country’s finances in check. The budget will also have to consider the ongoing pandemic and its impact on the sectors. The nation looks forward to the Union Budget 2023 with elevated expectations and optimism.

Union Budget (India) 2023 - Expectations

India’s Union Budget 2023 is set to be presented on 01-February 2023. This is the last full budget by the current government, before going for the general election in 2024. The budget is expected to address the country’s pressing economic issues and lay out a roadmap for India’s growth and development in the coming fiscal year.

The three words that have summarized the Central Government’s focus in the past three fiscals: Support à Recover à Growth. During its worst phase, the Govt. announced a stimulus package to support and recover the Indian economy. Now, the focus is shifted to growth.

The COVID-19 pandemic severely impacted the Indian economy. However, with the Government’s expansionary fiscal measures and stimulus, the Indian GDP bounced back in FY 22 with a V-shaped recovery. For FY23, despite global inflationary pressure, tightening of liquidity by central banks, and sharp appreciation of the US dollar, the GDP was still growing positively. India witnessed the following GDP growths - 

2020-21: negative 6.6%

2021-22: 8.7%

2022-23: 7%

The Economic Survey presented today has projected a GDP growth of 6-6.8% for the fiscal year 2024.

For the upcoming budget, the government should take steps to achieve the target of USD 5Tn GDP in the next couple of years.

1. Infrastructure: The government should commit capital expenditures for infrastructure development and build ports, roads, airports, and other infrastructure. The upscaling and balancing of the infrastructure and the digitization of agencies to make them work not in silos but in synchronization.
2. PLI Scheme: An extension of the Production Linked Incentive Scheme is highly anticipated, given the fact that it reaped impressive results across 14 sectors, helping boost ‘Atmanirbar Bharat’. The scheme has received an excellent response and an extension will give an impetus to domestic manufacturing and growth.
3. Renewable Energy: India is the among the world’s largest producers of renewable energy, but we still have a long way to go. Despite a significant push from the government, solar installation in India has not taken the uptick to attain the desired momentum. To meet the 2030 Solar Mission Target, the government should announce tax benefits for companies installing solar panel plants and for taxpayers installing solar rooftop power systems.
4. Tax Benefits (Individuals): The extant limit of INR 1,50,000 under section 80C of the Act was last revised by the Finance Act 2014. Given the rate of inflation since then, it is the need of the hour to re-consider the limit and provide relief to the assessees especially the lower income group.  Similarly, the present limit of deduction under section 80D of the Act seems insignificant as compared to the amount spent on medical insurance. Even the medical expenditure incurred in Covid as well as post-Covid era are humungous and have immensely affected the pockets of a common man.
5. Standard Deduction (Salaried Individuals): A standard deduction of INR 50,000 is provided for individuals while calculating salary income. While there are limited avenues for a salaried individual to deduct from salary, person carrying on a business/profession are allowed to debit various expenses in their profit and loss account during calculation of income under the head ‘profit and gains of business or profession’. Notably, even the salaried individuals must incur various expenses such as travelling expenses, communication expenses etc. for which they are not allowed any deduction, although the same is incurred during employment. Keeping into consideration that the major portion of personal income-tax collection comes from the salaried class, it is prudent to expect some relief to salaried class.
6. Direct Tax: Tax concessions for partnership firms, Limited Liability Partnerships and foreign companies are expected, in line with the corporate tax rate cuts of 2019.
7. Agricultural Sector: The sector which continues to be the backbone of the economy has been hit hard by the pandemic and the government is expected to announce measures to support farmers and rural development. This could include increasing investment in irrigation and rural infrastructure, providing subsidies for farm equipment, and strengthening the supply chain for agricultural products.
8. Unemployment: The unemployment rate in India has been on the rise due to the pandemic and the government is expected to announce initiatives to support small and medium-sized enterprises, which are another backbone of the Indian economy. This could include tax incentives, subsidies, and credit guarantees to help these businesses survive and grow.

The Union Budget 2023 is expected to provide a comprehensive plan for growth and development while balancing the need for stimulus to revive, support and escalate the progress in the various sectors like Agriculture, Infrastructure, and Financial Services, among others. 

Productivity at Workplace

The theory without practical is lame and practical without theory is blind.

Employee productivity is a serious workplace problem and an expensive occurrence for both employers and employees, as well as unpredictable in nature. The productivity of the employees is critical to raise employees’ performance which contributes to the success of organizations, and it is influenced by many factors.

The working environment plays a key role in the employee’s productivity. The working environment is argued to impact immensely on employee’s productivity either towards negative or the positive outcomes. Various thoughts indicate that the factors such as dissatisfaction, cluttered workplaces and the physical environment are playing a major role in the loss of employee’s productivity, which depends on the willingness and the openness of the employees themselves on doing their job. Furthermore, a reward system based on the productivity of the employees motivates them to perform more of their tasks.

There are several factors such as physical work environment, equipment, meaningful work, productivity expectation, and feedback on productivity, reward for good or ineffective system, standard operating procedures, knowledge, skills, and attitudes contribute to employees’ productivity.

The job satisfaction-productivity linkage has been primarily discussed by theorists from these perspectives - 

• Organizational productivity depends on congruence between the technical and social structures of the organization
• The human relations perspective posits that satisfied workers are productive workers

Organizational productivity and efficiency are achieved through employee satisfaction and attention to employees’ physical as well as socio-emotional needs, best achieved by providing autonomy, participation, and mutual trust.

The success of an organization is a function of the productivity of the employees and is a driving force which will push these critical elements of the organization to improve and deliver better performance to push the improvements in the job performance. This research has explored the meaning of. Each factor, namely, work environment, organization culture, and leadership style have a different impact on the productivity of the employees. Furthermore, there are specific dimensions related to culture that impact productivity like creativity level. As for the work environment, all the factors that go under it have an influence on employees’ productivity.

Jack or Master: the dilemma between multitasker and domain expert

Every entrepreneur understands that growth is what creates value. The question is, how do you create the growth that creates value? Marketing, the world over has moved from the 4Ps and is primarily defined by the variables of 3Ps – Product, Process and People. They function as the cornerstone for everything your business does.

The best teams are those that have a mix of skills, expertise, and experience where the exact mix is defined based on the problem you wish to solve. To build the best team, start thinking about what it is that will have the greatest impact on your growth like prioritization, hiring or internal movement of the right resources, to fit it into your growth process, and most importantly stop expecting immediate results or dividends – don’t expect quick wins – sustainable growth evolves and then explodes and is not an overnight success.

It is a well-established fact that hiring or selecting the right team is usually not a cakewalk. It is time-consuming, cost-extensive, and can be a tricky business. Having the right team also helps the likelihood of raising investments. From an investor’s perspective, the firm or fund house looks at the four Ts – team, technology, total addressable market, and traction.

The hiring pattern is determined by a multitude of factors like sector, stage, and business model of the startup. While multitaskers are great for a startup that aspires to have a lean team, domain knowledge is an important indicator of potential job performance. Owing to the challenging environment in a startup, founders often need to hire employees who can work across departments and play a variety of roles at the same time. However, once a startup achieves the product-market fit and scales beyond 100 employees, specialists should perform functions to allow the company to solve problems efficiently while focusing on scaling. As a business grows and moves from agility to stability, companies should start moving from hiring multitaskers to seeking domain experts.

To sum up, domain experts and multitaskers are both valuable and critical for a startup. Hiring a candidate for a particular role involves considering factors like knowledge about the sector, pain points, and the solution.

Mentorship

Till very lately, my perception about having a guide or mentor (professionally and/or personally), was to have that one person whom you look up to as an ideal who guides you throughout your whole career and/or life. This holds some grounds with the fact that our psychology and belief were built on the basis of the numerous questions in our early and mid-childhood, about a childhood hero, role model or ideal, who you look up to and want to become like when you grow up. My understanding and expectations from a mentor revolved around the fact that you learn their way of life, skills, take their advice and (hopefully) shortcut the process that helped them succeed. What took them decades, can take you just half - with their advice.

The truth is, this unicorn of a mentor is a myth. There is no shortcut and no one “perfect” mentor who can help you conquer all your career goals.

Why?

Perhaps, you don’t want the exact skills or behaviours they have for yourself. Maybe you just want 1 or 2 skills they have. They could have incredible technical skills but have terrible communication. Maybe you want to forge your own path - one that no one has ever treaded on before.

I quickly found out that I needed to reframe how I thought about working with mentors. I asked myself, ‘how can I engage a mentor to get what I want out of them?’. Now, I have dozens of mentors that I talk to when I have specific problems or questions. This gives me a diverse set of experiences and data points to craft my own unique pathways.

Storyteller

Sometimes, we just want to hear stories and recounts that could inspire us and could help us pull insights for ourselves. We know people who are successful, but they can’t really explain how they became successful, like if you ask an ace archer how they consistently hit the bullseye or the 10-pointers, they may just say something so simple which might not make any skill-based sense.

The Level 35 Player

This is a person who is an expert in their craft. The question arises here, why Level 35 because it is next to impossible to get audience with even a so-called Level 60-70, let alone a Level 90-100 player because they are inaccessible, have paucity of time and may not be in a position to respond most of the times. Instead, we focus on people who are very skilled at their craft but have the time and are excited to share their skills.

Co-Pilot

These mentors are most helpful because they ride the journey with you and have a higher propensity to offer honest feedback with their skin in the game. The discussions, queries and conclusions should be able to make each other comfortable, honest, and without getting too defensive about either's work.

Evangelist

These are the mentors that have a network and can help you find the right opportunities. Attracting these mentors is hard, but well worth the effort.