Economic Survey: India Envisions To Become A ‘Fintech Nation’

Riding on the back of the country’s digital public infrastructure (DPI), India aims to emerge as a ‘fintech nation’ housing the highest number of fintech firms, the Economic Survey 2023-24 said.

The country also aims to have the highest fintech adoption rate in the world, the Survey said.

The Survey highlighted the key role played by DPI in the growth of the fintech industry and said that India is among the fastest-growing fintech markets in the world and is the third-largest growing fintech economy.

It is pertinent to note that India has seen rapid adoption of digital payments like UPI and other fintech services in the last few years. Going ahead, the Survey said, artificial intelligence (AI), machine learning (ML), decentralised finance, Internet of Things (IoT) have the potential to further disrupt the digital payments ecosystem.

The document also suggested steps to further improve fintech adoption in the country, and pitched for adoption of a common approach for using customer data across regulators.

“In the medium term, efforts should be made to move towards data-based lending instead of judgment-based lending, especially for small businesses. In this regard, there is a need for continuous review to identify regulatory gaps/overlaps and benchmark them with the best global practices. Financial sector firms – public or privately owned – must become customer-centric. Without that, most quantitative metrics will remain elusive,” the Survey said.

The Economic Survey credited the Covid-19 pandemic for the rise in digital transactions in the country. It particularly highlighted the growth of the Unified Payments Interface (UPI), saying the value of the transactions on the platform grew to INR 200 Lakh Cr in FY24.

The number of UPI transactions stood at 13.89 Bn in June 2024, up 49% year-on-year.

The popularity of UPI has resulted in the emergence of a number of fintech startups in the country over the last few years. Many of these startups started as UPI payments providers and later added other financial services on it.

According to Inc42 data, India has over 24 fintech unicorns, and 36 soonicorns. These startups are trying to grab a pie of the country’s fast-growing fintech market which is expected to become a $2.1 Tn opportunity by 2030.