Union Budget 2016 - What Startups Expected and What They Received
With great expectations for small and medium businesses and tax-payers, the country waited wide eyed. Now that it is out, the reactions are mixed and simply suggest that not everyone can be pleased.
Presenting his third Union Budget, Finance Minister Arun Jaitley focussed on the nine pillars of our economy to create the impact we all anticipate. The fiscal deficit target was set at 3.5% for 2016- 17 and India’s GDP is at 7.6 per cent despite slowdown in exports. Agriculture and rural development, was the focus and the government kept ‘Stand Up India; Startup India’ in mind. Here we list the schemes that have been introduced to help the startup landscape in the country and what business owners think about them.
The focus is to educate India and thus a higher education financing agency with Rs. 1,000 crore corpus has been announced. There will be a digital repository for all schools leaving certificates and diploma.
Two schemes will be implemented for digital literacy for rural India covering 6 crore households in the next three years. Rs. 1,700 crore will be provided 1500 multi-skill development centres; and, 10 public and 10 private educational institutions to be made world-class.
Mr. Dinesh Goel, Co-Founder and CEO of AasaanJobs.com commented, “While it is heartening to see the allocation of funds in Budget 2016 to strengthen higher education through a non profit organisation and skill development through the Pradhanmantri Kaushal Vikas Yojana, the future plan involving the setting up of 1500 skill institutes should be done in tandem with the industry expectations of skills required in various job roles today.”
Mr. Pramod Saxena, Chaiman & MD of Oxigen Services said, “The digital literacy mission that has been announced which will target 6 crore households with financial literacy, with this the digital connect and payments connect will play an important role. Also, statutory status to Aadhaar will play a very big role in promoting digital payments, social benefit transfers and allowing several services beyond banking and insurance to be also be brought into its fold, whether it is government subsidies or government payments it will open a way for more government payments and subsidies to flow into the financial inclusion program.”
Roads and Infrastructure
Passenger traffic on our roads has been made more efficient. This is a totally unreformed sector which suffers from several impediments. Abolition of the Permit Raj will be our medium-term goal. We will enact amendments in Motor Vehicles Act – Jaitley
A comment shared shared by Rajiv Vij, MD & CEO of Carzonrent, states, "FM’s focus towards infrastructure development, rail and expanding road network is a welcome initiative, which will inject new energy in to related sectors like transportation, tourism – domestic and inbound, automotive, construction, etc.. which are important contributors to the GDP of the Country. We also see this as a booster to the mobility services providers, like us, as people will see improving road network enable them to plan their travel by road, reduce travel time, de-congest the existing roads as alternate routes will be developed. Thus, encouraging people to undertake trips using self-drives or other options of car-rental services."
According to Alok Bajpai, Co-founder of ixigo, “The Union Budget 2016 has laid out big investments for the infrastructure sector which include allotment of funds for the development of roads and highways and an action plan to revive 160 non-functional airports. These steps come as a welcome move for the travel and tourism sector.
The focus on travel and tourism is further reaffirmed with the Finance Minister announcing the annual programme “Ek Bharat – Shreshtha Bharat” which will aim at linking states and districts through exchanges in areas of language, trade, culture, travel and tourism.
Further, we also welcome the Government’s initiative to increase baggage allowance for international passengers and exempt passengers flying into India from filing the baggage declaration form if they are not carrying dutiable or prohibited goods. This will surely ease inbound tourism.”
Start up India; Stand Up India
The timeline to register companies reduced to one day and 100% tax exemption for 3 out of 5 years
Although the timeline to register is reduced to one day, it was the tax exemption that was welcomed whole-heartedly. It seems like a good move given the financial pressure start-ups face in the initial years and the lack of profits.
“Union Budget 2016-2017 seems to be in favor of startups with the aim to accelerate entrepreneurship in India and make it a robust economy. 100% tax exemption for three years except MAT will motivate start ups to gain momentum in their respective businesses. The budget also caters to ensure speedy registration to boost start-ups with the succour from companies act,” says Mr Neeraj Mittal, JMD Bonita India.
Vijay Shekhar Sharma, Founder and CEO of Paytm says, “With the focus on digital payments and incentives to startups, the Finance Minister has boosted our Prime Minister's Digital India and Startup India plans. Overall, the budget creates a strong foundation for sustainable growth in rural and urban India. Steps to further improve ‘Ease Of Doing Business’ will drive entrepreneurship which is essential for job creation.”
Lowering of Corporate IT rate for companies not exceeding Rs. 5 crore turnover to 25% plus surcharge and fiscal deficit within 3.5% of GDP
With this in mind, Dinesh Agarwal, Founder and CEO, IndiaMART commented, “Lowering of Corporate IT rate for companies (for new manufacturing companies and SMBs) not exceeding Rs. 5 crore turnover to 25% plus surcharge, tax holiday for startups for three of five years of setting up the company, the massive investment in the road infrastructure would provide support and boost to the MSMEs, startups and our overall ecommerce industry.
The Budget further strengthens the Financial System starting with the recapitalization of Banks. Since, Capital is the biggest woe for any entrepreneur, disbursement of MUDRA funds to 1,80,000 crore would add the apt backing.”
According to Mr. Sandeep Nayak, ED and CEO of Centrum Broking Ltd., “The fiscal prudence demonstrated by the Government in keeping the fiscal deficit within 3.5% of GDP is the biggest positive from this budget. This now paves the way for a rate cut by RBI which will be a further boost to the economy. The budget lays high emphasis on (a) the revival of the rural economy (b) the agriculture sector and farmer welfare and (c) infrastructure which is a key need for firing the investment cycle in India.”
Adequate support to women and SC/ST entrepreneurs
Lastly, the government did not ignore the increasing output in the entrepreneurial world from the under privileged parts of society. Special focus has been given to scheduled casts and tribes, and women entrepreneurs.A corpus of 500 crore is attributed to supporting the various SC/ST and women entrepreneurs and providing them help on their journey. It has received a positive reaction all over, as the founder of EasyFix.in, Shaifali Holani, evidently said, “"The Budget booster dose under the Stand Up India scheme for women and Dalit entrepreneurs will specially be helpful for our sisters in rural India. More women will Stand-Up to recognise their inherent qualities of a successful leader. Added to this is the mandate handed over to the banks to support up to two micro-enterprises each to SC/ST and women entrepreneurs, will, apart from giving them level-playing field across the socio-economic divide in the country, create economic independence, reinforce rights and make them more active participants in nation building. It's time for women to get over with their "self-doubt" and remember that a professional woman has to face distinct challenges but these aren't show stoppers, merely speed breakers that must be overcome.”
Kulpreet Kaur, Co-founder of Shop Pirate Coupons, on the other hand, was a little disappointed, as she said, “As expected the Union Budget 2016 has its focus on Standup India and boosting the budding entrepreneurs. We expect that 2016 is going to be a fruitful for women entrepreneurs as Stand Up India scheme allocated Rs.500 Crores for SC, ST and women entrepreneurs. However I am somehow not happy with the special treatment given to SC/ST entrepreneurs as this may discourage the upcoming talents who might not get an opportunity to bring an innovative business idea due to the scheme and at the same time might give an encouragement to someone who doesn’t deserve. Though it’s a good move to encourage entrepreneurs who didn’t get a platform to showcase their skills, but ensuring that scheme benefits right people and keeping an eye of the system to maintain discrepancy will be a tough challenge for the government. Allocation of Rs 1,000 crore for new EPF (Employees' Provident Fund) is welcoming. However no change in current taxation system is disappointing for ecommerce industry. Overall a good budget but not very impressive".
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