Decoding Budget 2020: FM brings new hopes for Indian businesses to grow
The Indian government appears to be ready to take up the reins of the new decade with a renewed sense of optimism. Finance Minister Nirmala Sitharaman’s proposed allocation of Rs 27,300 crore for the development and promotion of industry and commerce in 2020-21, shows the government’s push towards uplifting entrepreneurial confidence.
This Budget, which focussed on fundamental structural reforms and inclusive growth, can safely be called the Budget for the New Decade. Through it, Nirmala Sitharaman may well be able to help startups, as well as MSMEs, unleash their latent animal spirits once again.
Some aspects that will work towards an aspirational India and its economic development, keeping a caring society in mind can be seen in the following sectors.
The government comprehends the need for MSMEs to bring back their lost sheen. The announcement on a turnover threshold for the audit of MSMEs to be increased from Rs 1 crore to Rs 5 crore to those businesses that carry out less than five percent of their business in cash is a shot in the arm for the industry and will instantly uplift business sentiment.
The government’s attempt to address the credit crunch for the MSME sector is also laudable. Both amendments to be made – to enable NBFCs to extend invoice financing to MSMEs, and app-based invoice financing loans product to be launched – to obviate the problem of delayed payments and cash flow mismatches for MSMEs are welcome steps.
The Finance Minister reiterating “data as the new oil” only reassures startups that are at the forefront of digitisation and realise the revolution in business practices that it can bring.
The government’s plan to roll out a policy to enable the private sector to build datacentre parks across the country will make Indian businesses competent and help them match the potential of their global peers.
It’s heartening to see steps taken towards digital connectivity with a realistic view for a change.
Ease of Doing Business
For businesses, the Goods and Services Tax (GST) structure has been a deterrent since the new regime’s inception. It is interesting to see that the government has taken notice and is aiming to introduce a new simplified GST return system from April 2020. This will encourage traders to comply with more transparent business practices.
The Finance Minister also outlined two cross-cutting developments, namely the proliferation of technologies such as analytics, Machine Learning (ML), Artificial Intelligence (AI), and bioinformatics, and the number of people in the productive age group reaching a peak. This honest assessment shows the government’s connect with ground realities. As it looks to marry the two, it brings hopes for India under Modi 2.0.
Sitharaman spoke of the government’s vision to turn every district into an export house, which is good news. The new scheme to provide higher insurance covers, reduced premiums for small exporters, and a simplified procedure for claim settlements are welcome.
Also interesting for the sector is the government’s plan to set up warehouses by providing viability gap funding. This is a positive development ahead of the new Foreign Trade Policy 2020.
The government embracing entrepreneurship as India’s strength is sure to bring cheer to new business aspirants.
The setting up of an investment clearance cell for end-to-end entrepreneurial facilitation will take away fears of bureaucratic complexities in business and uplift the mood of the nation. The government’s announcement that tax burdens on employees due to tax on Employee Stock Ownership Plan (ESOPs) will be deferred by five years or till they leave the company or when they sell, whichever is earliest, will boost youth engagement with progressive startups.
Holistically speaking, this is a forward-looking Budget. The Indian industry has witnessed a sharp slowdown in the last year and Budget 2020 brings back hopes of new shoots of growth.
Hopefully, this will set the anticipated business attitude towards an upward trajectory in the coming year.
(Edited by Saheli Sen Gupta)
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)