The Union Budget coming in the wake of COVID 19 has been given thumbs up by the industry. There is a huge boost for healthcare, infrastructure, startups, Education Sector and Insurance. This will in turn increase spends and also bring in a positive consumer sentiment.
The FM Nirmala Sitharaman in her budget reiterated the PM’s call of AtmaNirbhar Bharat by giving a boost to small enterprises and also revised the Companies Act 2013. As per the revised norms, companies with paid-up capital of up to Rs 2 crore and turnover of up to Rs 20 crore will fall under small companies. This will benefit more than 2 lakh companies in compliance required. Now start-ups that are one-man companies will get additional incentives and restrictions on paid-up capital or turnover for one-person companies will be lifted; besides they will also have the liberty to convert into any other type of company at any time.
The FM also focussed on Digital payments and emphasizing the importance of Artificial Intelligence and Data Analytics for efficient digital governance. To give a further boost to digital transactions, the budget earmarked 1500 crores to promote digital payments.
We spoke to Industry stalwarts across the spectrum.
Harshad Chetanwala, Co-Founder- MyWealthGrowth.com.
The announcements in the budget have been in the right direction and it does have its heart in the right place as far as focus on growth and development is concerned. The emphasis on Health and Infrastructure is key for our economy from a growth perspective. An increase in infrastructure spending will drive growth, increase employment and boost consumption. This should benefit few sectors like banks, consumer discretionary, etc. Also, the firm stand and plans on divestment and monetization of certain PSUs look promising for our economy.
Rajesh Bhatia, Global & Group CFO, UFlex
The budget presented by the Finance Minister today is a balanced budget with a focus on infrastructure development, privatization, and disinvestment (huge divestment target of INR 1.75 lac crore), a major push in Central Govtcapex and credit expansion.
The move from Government to dedicate over INR 1.4 lac crore over the next five years towards ‘Urban Swachh Bharat Mission 2.0’ shows their resolve to manage the challenges of plastic waste in the country, with a firm approach.
Our joint project with CIPET for Municipal Solid Waste (MSW) Sorting and Segregation in Bangalore and Varanasi to separate the recoverable from the garbage and recycle the plastic waste constituents is a technology that complements the efforts of our government to manage plastic waste. As pioneers in creating plastic waste management solutions, along with manufacturing of the packaging for essentials, we would be glad to extend further support to the government in dealing with waste management and making India a cleaner country.
Jashan Arora, Director at Mastertrust
The 2021-22 budget comes amid the COVID-19 pandemic, it is a significant one for Finance Minister. Ms NirmalaSitharaman’s first budget of the decade doesn’t have much for the common man. While no changes were made to the personal income tax, senior citizens will get an exemption from filing returns. No income tax for those with taxable income below Rs 2.5 lakh. For the startups, she has introduced that the center will reduce the margin money requirement to 15 percent from 25 percent for schemes under Start-up India. There is nothing adverse as far as taxes are concerned.
The government has planned to inject about 64,180 Cr over the next 6 years in the health sector under PM “AtmaNirbharSwasth Bharat Yojana”. It is expected to develop the capacities of various health care units under National Health Mission to strengthen existing national institutions, create new institutions, and cater to the detection and cure of new and emerging diseases. The main interventions under the scheme support 17,788 rural and 11,024 urban Health and Wellness Centers. Setting up integrated public health labs in all districts and 3382 block public health units in 11 states. Expansion of the Integrated Health Information Portal to all States/UTs to connect all public health labs. Also, by setting up a national institution for One Health, a Regional Research Platform for WHO southeast Asia Region, 9 Bio-Safety Level III laboratories, and 4 regional National Institutes for Virology.
The Government has also shared a plan to divest 2 PSBs and bring in an IPO for LIC. This not only plans to minimize the thrust of Central Government in financial institutions but also opens up new investment space for the private sector. Post disinvestment, economic growth of Central Public Sector Enterprises (CPSEs)/ financial institutions will be through the infusion of private capital, technology and best management practices. This will contribute to economic growth and new jobs. Disinvestment proceeds to finance various social sectors and developmental programs of the government.
Nitin Chavan, CEO, Aquapay Payment Technologies Pvt Ltd
We welcome the budget presented by the Finance Minister as we believe it offers much for the FinTech space. The proposal to set up Global FinTech Hubs at GIFT and the allocation of Rs. 1,500 crore for promoting digital modes of payment are both measures that will give the sector a boost.
Moreover, the incorporation of one-person companies to incentivize innovation in start-ups and the focus on R&D in AI and ML should make for an even more vibrant and thriving start-up environment than we already have today.
Lastly, the setting up of a separate Asset Reconstruction syndicate for dealing with NPAs is a much-needed measure. Together with the recapitalization of PSBs, it should set the stage for a much-needed clean-up of bank balance sheets.
Yogesh Mudras, Managing Director, Informa Markets in India
FM NirmalaSitharaman presented the first-ever paperless budget with a special focus on Healthcare and Infrastructure sector. The announcement for Rs 64,180 crore for the overall Healthcare sector in the Union Budget of 2021 was a vital move by the Government to strengthen the Health and Wellness centers across India and contribute to our National Health Mission. The vision for recovery in the state-wise infrastructure activities supported by robust investments will give the economy the much-needed impetus and help us march towards the $ 5 trillion mark. The collateral-free loans and funds for MSMEs will stimulate growth and render solace to MSMEs hit by the pandemic.
Vinaya Varma, MD, and CEO, mjunction services
Finance Minister NirmalaSitharaman in her Union Budget 2021 speech has put a lot of focus on monetization of stressed and idle assets creating opportunities for electronic platforms for transparent price discovery processes. Stressed asset resolution by setting up an asset reconstruction company and asset management company, creation of a Special Purpose Vehicle to carry out monetization of non-core assets including surplus land would contribute to the idea of AtmaNirbhar Bharat and help shore up essential revenues for economic revival. For the steel sector, a voluntary vehicle scrapping policy to phase out old and unfit vehicles would increase the availability of scraps.
Nikhil Kamath, Co-Founder and CIO, True Beacon and Zerodha
The budget largely turned out to be a non-event; the cardinal issue here seems to be that barely 3% of the country is paying tax. To drive any kind of stimulus the government will have to shore up this number significantly. From the market’s perspective, no reduction in GST or an increase in LTCG largely indicates no change; it is net neutral to the markets. International markets happen to be rallying today and markets are taking cues from this, for now, foreign flows that are largely driving this up move will continue to be an important metric to track going forward.
Srividya Kannan, Founder, Director – Avaali Solutions Pvt Ltd.
The first time paperless budget presented in the ‘made in India’ tablet brought in much cheer to speed up the economy. Sharp increase in capital expenditure, massive investments in infrastructure, roads and railways and customs duty reduction on certain components to promote domestic manufacturing are very encouraging to further boost the economy and create a self-reliant India.
For start-ups, this is a great budget with tax incentives and extensions on tax holidays and capital gains exemption. The incorporation of a one-person company including a residency limit for an Indian citizen to 120 days is all really good measures to increase the number of start-ups in India. Also, the change in the definition of a small company will definitely benefit several enterprises in the form of further simplifying adhering to regulatory and governance requirements. It is estimated that over 2 lac firms will be benefitted as a result of this. Also, tax reforms and simplifying the tax governance to make it easier for companies and individuals is a much welcome move.
Overall, this budget has brought in the much-needed boost across several sectors to accelerate the pace to recovery and growth.
Aditya Anand, Chief Revenue Officer of Viral Fission
The institutional effort to reinstall the consumer’s faith & increase consumer spending in the post-covid world is commendable. The year 2020 saw a spike in the ad-spends on digital mediums, while other mediums saw a decline & in my opinion, 2021 will be the year where brands will invest heavily in digital advertising, due to its effectiveness and mass reach.
Efforts by the government to create a digital-first mindset for the youth across the country will shape a new generation of consumers who are digital-natives, which will further give birth to start-ups offering innovative marketing methods to create 360-degree branded-experiences bridging offline and online advertising seamlessly. The most seamless way to tap into the fastest-growing digital population is to use a strong sense of community. What the government is doing is creating one of the world’s largest digital communities waiting to be tapped.
Adarsh Kumar, Co-Founder, PagarBook
The Honourable Finance Minister included SMEs/MSMEs as one of the sectors of focus. SMEs are the backbone of the country and have been contributing a huge chunk to the national GDP. A good boost has been announced in favor of budding entrepreneurs. Redefining MSMEs and making the incorporation of start-ups easier while enabling one-person companies is a positive step to encourage start-ups as it provides tremendous flexibility for entrepreneurs. It is also encouraging to see the government has doubled its allocation towards the MSME sector by setting aside Rs 15,700 crore in FY22.
Vishal Bhatia, Chief Financial Officer, True Balance
The introduction of a new Development Financial Institution will help in creating opportunities and opening of doors for lending businesses in India. A boost to the lending sector will lead to more circulation of money, leading to more purchasing power, providing the much-awaited boost for the economy, in the post-COVID circumstances.
It is a welcoming move to promote a digital mode of payments, with the allocation of INR1500/- crores. The digital payments infrastructure will see an upliftment in adoption as well as utilization by all sectors of society, leading to a stronger digital economy.
Raghav Kansal, Founder & CEO, ET Medialabs, a digital advertising, analytics, and reporting solutions company
The Finance Minister’s first paperless and crucial budget of the decade turned out well for start-ups as the Budget made space for easing norms around setting up of One Person Company (OPC) by reducing the residency limit of NRIs from 182 to 120 days. Earlier, only Indian resident citizens were allowed to form one person companies in India. Allowing the relaxation on OPC will be helpful in encouraging solo founders to take the leap into entrepreneurship, will also encourage start-ups and entrepreneurs to do business in an organized structure that will help them to grow and boost the economy. Additionally, minimizing the tax burden is a strong step forward to support the start-up ecosystem. It would have been great if there was a tax rebate on ESOPs as it might be more beneficial in the long run.
Praveen Nijhara CEO, Hansa Research Group.
The budget gave a strong feeling that the government is very keen on making sure that the rural-urban divide is bridged, and quickly. The rural economy has reported heartening numbers and one believes that India’s post-COVID recovery will be triggered from the villages and towns. The budget does well to make sure that the government spends towards making society more equitable. One would have hoped for some relief to income taxpayers keeping in mind the tough year gone by, but I suppose the FM won’t hesitate in revisiting that part of the budget if need be.
As a research & insights firm, we are very happy with the Rs.3,768cr allocation made for the census. The fact that this will be India’s first digital census is only the icing on the cake and we very much look forward to seeing it happen.
Kamal Johari – Managing Director, Nobel Hygiene
The tax rate has not been changed, neither has a COVID surcharge been imposed which has come to a pleasant surprise & also reflects positively in stock market movement. Government focus on infrastructure spending is very good for growth and the economy. Faceless Income Tax tribunal is a good move; as is the step to disinvest from 2 PSU Banks. In this Budget, the government also has provided Rs 15,700 crore to MSME sector, more than double of last year should also help towards the growth of the sector.