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23 August 2024 at 4:29:04 pm

Festive Surge

India’s bazaars have glittered this Diwali with the unmistakable glow of consumer confidence. The country’s festive sales crossed a staggering Rs. 6 lakh crore with goods alone accounting for Rs. 5.4 lakh crore and services contributing Rs. 65,000 crore. More remarkable still, the bulk of this spending flowed through India’s traditional markets rather than e-commerce platforms. After years of economic caution and digital dominance, Indians are once again shopping in person and buying local....

Festive Surge

India’s bazaars have glittered this Diwali with the unmistakable glow of consumer confidence. The country’s festive sales crossed a staggering Rs. 6 lakh crore with goods alone accounting for Rs. 5.4 lakh crore and services contributing Rs. 65,000 crore. More remarkable still, the bulk of this spending flowed through India’s traditional markets rather than e-commerce platforms. After years of economic caution and digital dominance, Indians are once again shopping in person and buying local. This reversal owes much to policy. The recent rationalisation of the Goods and Services Tax (GST) which trimmed rates across categories from garments to home furnishings, has given consumption a timely push. Finance Minister Nirmala Sitharaman’s September rate cuts, combined with income tax relief and easing interest rates, have strengthened household budgets just as inflation softened. The middle class, long squeezed between rising costs and stagnant wages, has found reason to spend again. Retailers report that shoppers filled their bags with everything from lab-grown diamonds and casual wear to consumer durables and décor, blurring the line between necessity and indulgence. The effect has been broad-based. According to Crisil Ratings, 40 organised apparel retailers, who together generate roughly a third of the sector’s revenue, could see growth of 13–14 percent this financial year, aided by a 200-basis-point bump from GST cuts alone. Small traders too have flourished. The Confederation of All India Traders (CAIT) estimates that 85 percent of total festive trade came from non-corporate and traditional markets, a robust comeback for brick-and-mortar retail that had been under siege from online rivals. This surge signals a subtle but significant cultural shift. The “Vocal for Local” and “Swadeshi Diwali” campaigns struck a patriotic chord, with consumers reportedly preferring Indian-made products to imported ones. Demand for Chinese goods fell sharply, while sales of Indian-manufactured products rose by a quarter over last year. For the first time in years, “buying Indian” has become both an act of economic participation and of national pride. The sectoral spread of this boom underlines its breadth. Groceries and fast-moving consumer goods accounted for 12 percent of the total, gold and jewellery 10 percent, and electronics 8 percent. Even traditionally modest categories like home furnishings, décor and confectionery recorded double-digit growth. In the smaller towns that anchor India’s consumption story, traders say stable prices and improved affordability kept registers ringing late into the festive weekend. Yet, much of this buoyancy rests on a fragile equilibrium. Inflation remains contained, and interest rates have been eased, but both could tighten again. Sustaining this spurt will require continued fiscal prudence and regulatory clarity, especially as digital commerce continues to expand its reach. Yet for now, the signs are auspicious. After years of subdued demand and inflationary unease, India’s shoppers appear to have rediscovered their appetite for consumption and their faith in domestic enterprise. The result is not only a record-breaking Diwali, but a reaffirmation of the local marketplace as the heartbeat of India’s economy.

Decoding India’s New ‘Jam Trinity’ in Digital Finance

Updated: Oct 22, 2024

am Trinity

India’s digital finance landscape is rapidly evolving, and the latest addition to this transformation is the Unified Lending Interface (ULI). After the overwhelming success of the Unified Payments Interface (UPI), the Reserve Bank of India (RBI) introduced ULI as a groundbreaking platform to streamline and rapidly scale the digital lending process. Currently, in its pilot stage, ULI is poised to revolutionize how credit is accessed, particularly by New-to-credit, agricultural borrowers and medium, small, and micro enterprises (MSMEs).

The Need for a Unified Lending Interface Access to credit has long been a challenge for many sectors in India, especially in the unbanked, rural, agriculture and MSMEs sectors. Despite the rapid expansion of credit coverage and increasing digitization of financial services, there is a significant unfulfilled demand for credit. Traditional lending processes often involve complex paperwork, multiple intermediaries, and lengthy approval times, making it difficult for small borrowers and people in remote areas to access loans easily.

The ULI addresses these issues by digitizing and expediting the loan application and approval process. By doing so, it aims to create a more efficient and accessible credit system for sectors that are crucial to India’s economic growth. The introduction of ULI marks a significant step toward bridging the credit gap and ensuring that financial resources are readily available where they are most needed.

Breaking Down the ULI

The Unified Lending Interface is designed to reduce the turnaround time (TAT) for credit assessment, loan processing and approval. It does this by facilitating a seamless exchange of digital information between lenders and borrowers. One of the key features of ULI is its ability to integrate financial data from various sources, including Aadhaar, e-KYC, PAN databases, land title records, cattle ownership, milk production, credit scores, bank accounts, and loan payment information of borrowers. This unified access ensures easy and comprehensive access to borrower information, leading to faster and more informed loan approvals.

With its plug-and-play architecture, ULI allows lenders to quickly access the information they need, reducing the time spent on due diligence and facilitating informed credit decisions. The platform features standardized application programming interfaces (APIs), ensuring smooth data integration and retrieval from multiple channels. This comprehensive approach simplifies the lending process, making it easier for rural and smaller borrowers to secure loans.

The New ‘Jam Trinity’

The introduction of ULI represents a significant leap forward in India’s digital infrastructure journey. It forms part of what is being referred to as the new 'Jam Trinity' in digital finance: the combination of Jan Dhan, Aadhaar, and Mobile (JAM), Unified Payments Interface (UPI), and now, Unified Lending Interface (ULI). Together, these platforms are creating a robust digital ecosystem that reduces the need for extensive documentation and streamlines access to financial services.

JAM has already expanded financial inclusion in India, providing millions of people with access to bank accounts, identity verification, and mobile connectivity. UPI revolutionized payments, making digital transactions seamless and accessible to all. Now, with the introduction of ULI, the focus is on credit access, completing the cycle of financial inclusion and empowerment.

Shaping the future

Currently, ULI is in the pilot stage, with plans for a nationwide rollout in the near future. During this phase, the platform is being tested to ensure that it meets the needs of both lenders and borrowers.

With seamless and comprehensive access to broader data points on borrowers, it will democratize credit reach by speeding up approvals and enhancing credit access to the unbanked and NTC segment.

The concept of aggregating the insights that are currently spread across different entities could well be a game changer for credit expansion in the MSME and rural segments. By enhancing transparency, reducing frictional inefficiencies, and promoting financial inclusion, the ULI will create the foundation for a more resilient and inclusive credit landscape in India.

As India continues its journey towards a fully digital economy, the Unified Lending Interface stands out as a pivotal development. Once fully implemented, as part of the new ‘Jam Trinity’; ULI is set to play a critical role in shaping the future of digital finance in India and drive the growth agenda for a ‘Viksit Bharat’ by 2047.

(The writer is Co-founder and CEO of Credgenics. Views personal.)

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