A climate of pessimism and fear was responsible for falling credit growth, which fed into a slowdown in private investment and consumption. The Government’s role is to bolster confidence.

As a confident State steps in, begins to spend, and turns around the financial sector, private spending will also revive. Private investment projects had started in end-2017 as some sectors were running into capacity constraints, and then dried up because of the NBFC credit slowdown and election-related political uncertainty. It should revive again, especially since interest rates are coming down. G-Secs rates have fallen after the Budget.

• The ?70,000 crore to be pumped into public sector banks coming after the asset clean-up has started yielding results, together with a series of measures for non banking financial companies (NBFC) will help credit growth.
• Spreads for corporate bonds and NBFC funds should also come down. Many NBFCs continue to have viable business models. The fear of credit risk will fade as costs come down and activity revives. The moribund real estate market that is responsible for much destruction of asset value will get a fillip from tax exemptions and lower interest rates.
• Reserve Bank of India (RBI) is the regulator for NBFCs. However, RBI has limited regulatory authority over NBFCs. Appropriate proposals for strengthening the regulatory authority of RBI over NBFCs are being placed in the Finance Bill.

Efficient and conducive regulation of the housing sector is extremely important in our context. The National Housing Bank (NHB), besides being the refinancer and lender, is also regulator of the housing finance sector. This gives a somewhat conflicting and difficult mandate to NHB. Budget proposed to return the regulation authority over the housing finance sector from NHB to RBI

To promote digital payments further, budget proposed to take a slew of measures.

• To discourage the practice of making business payments in cash, a levy TDS of 2% on cash withdrawal exceeding 1 crore in a year from a bank account.
• Further, there are low-cost digital modes of payment such as BHIM UPI, UPI-QR Code, Aadhaar Pay, certain Debit cards, NEFT, RTGS etc. which can be used to promote less cash economy.
• The business establishments with annual turnover more than 50 crore shall offer such low cost digital modes of payment to their customers and no charges or Merchant Discount Rate shall be imposed on customers as well as merchants.
• RBI and Banks will absorb these costs from the savings that will accrue to them on account of handling less cash as people move to these digital modes of payment.
• Necessary amendments are being made in the Income Tax Act and the Payments and Settlement Systems Act, 2007 to give effect to these provisions.

Budget 2019 says that, “It is time to take our capital markets closer to the masses and meet various social welfare objectives related to inclusive growth and financial inclusion. “

Budget proposed to initiate steps towards creating an electronic fund raising platform – a social stock exchange - under the regulatory ambit of Securities and Exchange Board of India (SEBI) for listing social enterprises and voluntary organizations working for the realization of a social welfare objective so that they can raise capital as equity, debt or as units like a mutual fund.

• It is important to get retail investors to invest in treasury bills and securities issued by the Government.
• Efforts made by the Reserve Bank will need to be supplemented with further institutional development using stock exchanges.
• For this purpose, inter-operability of RBI depositories and SEBI depositories would be necessary to bring about seamless transfer of treasury bills and government securities between RBI and Depository ledgers and for enabling this.
• The Government will take up necessary measures in this regard in consultation with RBI and SEBI.

Thus, Budget 2019-20 has put across a holistic platform for both flow of moeny and its progressive utilisation.