Going ahead, rural demand is set to sustain as
rabi sowing has been on higher acreage. The government has also announced a fresh
fiscal stimulus of Rs. 2.65 lakh crore, extending the Emergency Credit Line Guarantee to MSMEs till March 31, 2021; facilitating a new scheme for jobs under AatmaNirbhar Bharat Rozgar Yojana; extending Production Linked Incentives Scheme to 10 more sectors; higher outlays for rural employment and urban housing etc. Fiscally more conservative, such an investment-employment oriented approach works towards sustainable growth in the longer run; the flip side being that lack of demand support adversely affects those in the low-income brackets.
The pandemic has also exacerbated gender inequality. An
ongoing survey on MSMEs by Global Alliance for Mass Entrepreneurship (GAME) and LEAD at Krea University shows that women-owned small businesses have been more badly hit - 43% of women-owned enterprises surveyed reported monthly profit less than Rs 10,000, compared to just 16% of units owned by men. The issues facing women entrepreneurs are well-known and gender-sensitivity needs to be built into every level of government and banking. As this
paper from MicroSave documents, response to the crisis should be gender transformative, and there are digital solutions to reduce the gap in access to credit for instance. We believe that the first step towards this transformation lies in gender-disaggregated data from the RBI, which is one of the many asks
made by Indicus two years ago that remain unaddressed.
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India is going through a digital payments revolution, with a flurry of activity in November - the
Regulatory Sandbox got traction with six entities selected, of which two have already begun their testing;
WhatsappPay was given permission to begin operations, under some restrictions; UPI transactions reached a record high, doubling from last year to touch 2.21 billion, Rs 3.9 trillion went through this platform, with an average transaction size of Rs. 1726 (See
graphs in this tweet by DICE). Meanwhile
NPCI has set in cap of 30 percent of total volume of transactions processed in UPI by a Third Party App Provider (TPP) to start from January 1, 2021, this move is to mitigate risks to the ecosystem as UPI transactions scale up. Also,
NPCI diversified its ownership further through private placement - participation by non-bank payments firms has increased somewhat and hopefully levels the playing field a bit, though large banks continue to hold more than three-quarters of the shares.
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The RBI placed
the Report of the Internal Working Group to Review Extant Ownership Guidelines and Corporate Structure for Indian Private Sector Banks on the website for comments to be sent in by January 15, 2021. While the recommendations made towards rationalisation of the norms of ownership across all types of banks are in the right direction, one controversial recommendation has been to allow large corporates/industry houses to be promoters of banks, after appropriate changes in the Banking Regulation Act 1935 and strengthening supervisory mechanisms. However, while private capital should be encouraged to enter banking, the Indicus view veers towards drawing a line at allowing corporates and large industry houses as promoters in India. Particularly for financial inclusion, we need more privatisation, competition and innovation in banking, no doubt, but the corporate sector does not have the expertise in banking, its capacity lies somewhere else.
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