Every budget has some things or the other that would positively impact entrepreneurs and small businesses. The proposed Finance Budget 2019 is no different. While the whole media is talking about the Loan Waiver scheme or the Income Tax Rebate, people should also notice how significantly the various measures announced by the Government has the potential to have huge impact on the eco-system as a whole. The Minister said, “India has become the second largest startup hub of the world. We are proud of the hard work and innovative ideas of our youth in this sector.”
Following are some of the key measures taken by the Government which should impact Start-ups–
Formation of National Center for Artificial Intelligence- In order to bring the benefits of artificial intelligence and related technologies to the common people, a national center for Artificial Intelligence (AI) will soon be established. The new scheme on AI is a futuristic scheme, which may promote use of technology and digitization. This should provide tremendous opportunity of growth offered by AI based startups.
Push for Digitization- It seems the Government is very much focused to make India a Digital India. In fact, as per the data given by the Government, Common Service Centers have found huge takers for it services and have generated employment of around 12 lakhs people. CSCs are physical facilities for delivering Government of India e-Services to rural and remote locations where availability of computers and Internet was negligible or mostly absent. To take this further, Government announced that it will transform one lakhs villages into digital ones over the next five years.
The Government also assured that compliance procedures and regulatory bottlenecks concerning startups are also being currently looked into. GST returns for almost 90% of GST Payers will now be done quarterly online. The Government will be using using Technology to smoothen the Income Tax Filing and refund process within a day and also automate Scrutiny process. Fintech Industry should benefit in this regards due to this.
This digitization of the economy has also happened due to government’s push in electrification and increasing internet penetration in rural economy. Increased availability of electricity will automatically drive digital growth and increase internet penetration which is around 21.35% in rural economy. The drive has already given incredible result. The cost of data and voice calls in India is now possibly the lowest in the world. Mobile and mobile part manufacturing companies have increased from 2 to 268. Both Consumer and Electronic Start-ups will indirectly benefit as their customer base will broaden.
Small, Marginal Farmers to get Rs 6,000 Per Year In Direct Transfer and Fish and Animal Husbandry Industry will now be focused upon- The government will give direct income support of Rs 6,000 per year to every small farmer. Poor farmers will get cash in three equal installments under PM Kisan scheme along with increased Kisan credit limit. 2% interest subsidy to given to farmers involved in animal husbandry. Also, an additional 3% subsidy will be offered for timely payment of loans. This move is indicative of the government’s efforts to further push the agricultural community towards the digital economy. Also this will encourage effective financial management among the SMEs working in this sector. Not only this sector, but this move will have indirect benefit into agri-tech Startups specially those which are working for improving the soil treatment and crop yield.
Focus on SMEs with special emphasis for women entrepreneurs-Government Industries will source 25% material from SMEs and 3% from only women-owned SMEs. Mr Goel added that the government’s dedicated website for MSME borrowers offers automated processing of loans, which provides in-principal approval in less than an hour. These moves will provide a short in arm for small businesses in the country and have a direct impact on women entrepreneurs. Also allocation for Mudra Loan has been kept at 4000 crore. More than 70% of MUDRA yojana beneficiaries who are women should benefit.
Defence and Health Tech Startup- The overall objective of the Government seems making India self-reliant when it comes to meeting its health and national defence requirements. Defence Sector and National Health Policy has been allocated 3 lakhs crore and 52,800 crore respectively. Though on paper start-ups in both these industries should benefit as Government has committed allocation of sufficient fund in these sectors however it needs to be seen how this folds out as both these industries are tightly regulated and extensively research oriented.
Of course we would have liked a clarification on the dreaded Angel Tax from the Government but it seems we have to wait for the Full Budget on June this year for it. All in all there are various things to be upbeat about and it seems the Government has balanced the populist budget with enough incentives and opportunities for entrepreneurs to cheer about.