Analyzing Budget 2019’s Impact On The Indian Startup Ecosystem

The Indian startup community had high hopes from the Union Budget 2019. They might not be fully satisfied, but a few tangible steps are certainly there to help build a supportive startup ecosystem.

From a party that has been voted back to power through a landslide mandate, expecting a visionary budget with long term benefits is justified. When the finance minister, Nirmala Sitharaman presented her maiden budget on July 05, 2019, the startup community anticipated reforms for an enabling and encouraging startup ecosystem. How far were their expectations met? What Modi 2.0 government has in mind for them in the long term? Let’s see the relevance.

Angel Tax:

Angel Tax has ailed the startups, restricting their fund inflow significantly. Implemented in 2012 to discourage money laundering, the tax mandates privately-owned companies to pay 30% tax every time they raised funds exceeding the ‘fair valuation’ rates. The draconian law prevented foreign investors from funding Indian startups and hampered India’s aspirations of being the world’s startup hub. Per the Budget News 2019, the finance minister took up the issue and instituted dedicated committees tasked with settling issues that Angel Tax poses to startups.

The committee is supposed to have an accessing officer who will dispose of Angel Tax-related issues and issue demands on the consent of his/her supervisor. The caveat here is that the assessing officer’s interpretation will be crucial in all proceedings. Despite the innate loophole, this is a progressive step to remedy the contentious issue of Angel tax for the most part.

Easy and fast credit for startups:

The finance minister came up with INR 1 Crore – 59-minute loan service to simplify and fast track credit access to MSMEs across sectors, as a newspaper app reported. A dedicated web portal is instituted to help MSMEs to skip the hassles usually associated with the loan application, approval, processing and disbursement. As the name indicates, the service guarantees up to One Crore loan within 59 minutes flat for the benefit of the MSMEs reeling under resource crunch.

Also Read: Elon Musk Brings Cheer To Tesla’s Indian Fans – Car To Be On Road In 2020

Rural entrepreneurial dream:

The startups are presently centred in the urban areas and Modi 2.0 government is keen to take them to remotes across the country. The union budget has provisions for the establishment of entrepreneurial skill development programmes in underserved areas to encourage more entrepreneurs to jump in the startup bandwagon. Plus, setting up 80 livelihood incubators and 20 technology incubators by 2020 is proposed to realize the rural entrepreneurial dream.

A startup channel:

Yet another step towards promoting the startup culture is the establishment of a dedicated startup channel. The channel will operate under the aegis of the Doordarshan Group, a government-owned autonomous public service broadcaster.

The startup channel will focus on providing the required encouragement and relevant information from the startup world on a real-time basis. As per the breaking news in Hindi, the point is to create a new line of startups from tier 2 and tier 3 cities that can help India become a $3 trillion economy by the year-end.