Finance Minister Nirmala Sitharaman would need to make some very tricky choices as she presents the Budget this year for 2020-2021. She would need to lift the economy without damaging the fiscal position of the government; boost consumption and at the same time substantially enhance investments.
“The recent growth of P2P lending platform has been largely driven by a huge demand for loans from the small businesses in the country”
Within investments, there are multiple issues, but the chief amongst them is the fact that most financial institutions, including banks, in the country have turned risk averse and the MSME sector is struggling to raise funds. The problem has only got acute with the crisis in the NBFC sector. When there is little or no credit available, investment from businesses would definitely skid. Both the banking and the NBFC sector would take its own time to find solutions to the problems, the best bet for .
On the lender side, the Budget should look at one of the long-standing wishes of the sector that calls for tax-free Investment limit. This provision would surely funnel individual disposable income to SMBs that need debt financing. This can be similar to investments you make in certain mutual funds or even infrastructure bonds that government-backed companies come out with. One way to handle such investments can, perhaps, be under Section 80C of Income Tax law or a different section/provision.