In 2020, around the same time, Finance Minister Nirmala Sitharaman was putting together a Budget that would potentially drive India into the $5 trillion economy club, unforeseen events due to the pandemic and ensuing lockdown altered not only these plans but also the future of every possible business across the globe. Yet, the country today is eagerly waiting for some relief measures to be announced in the upcoming Union Budget 2021.
Due to the coronavirus pandemic, the Government of India announced a slew of measures to help revive the economy. While the country is slowly recovering from the COVID-created economic slump, all eyes are on the post-COVID Budget and the possibility of tax relief for the average middle-class Indians; Medium, Small and Micro-Entrepreneurs (MSMEs) and startups which would help boost spending and thus place the Indian economy on a growth trajectory once again.
Need to sustain growth in startups
Startups are the backbone in the development and progress of the Indian economy. The Indian startup ecosystem has played a pivotal role in the country’s economic growth, with India now being the third largest startup destination in the world. However, it is important that the government looks at ‘sustaining’ this growth. The key request from startups and experts have centred around broad themes such as including tax relief and enabling more engagement between fintech startups and banks and other financial institutions to support other sectors through organised lending.
The 2021 Budget should focus on incentives for MSMEs and startups as these have been the worst-hit during the past year. Though we have had multiple announcements with respect to startups over the past few years, in reality, there are only a handful of companies that were able to avail these tax benefits over the larger startup population. Additionally, for startups, angel investing norms can be broadened to include debt investing in startups as the startup ecosystem matures in India.
Focus on 5G
Last year, we saw all industries turning to software and heavily relying on online applications and modes of communication. By now, we have realised how data is the new oil and is critical to India’s digital aspirations. Faster internet speeds to allow greater data consumption will be critical to laying the foundations of a digitally empowered society in the country. In 2020, there was a tremendous rise in over the top (OTT) platforms, work from home tools, team collaboration and communication platforms, and e-commerce platforms. These took the lead in terms of data consumption. The COVID-19 pandemic has ushered in the need to move to faster networks that minimise internet lags to a great extent.
If India is to keep pace and compete with other leading developed economies of the world, quick adoption of 5G will have to be fast-tracked in India. Along with global players, in 2018, India had planned to start 5G services, with an aim to capitalise on better network speeds and strength that the technology promised. From smart cities, industrial automation, connected devices, big data and cloud computing, 5G can truly prove to be a game-changer.
Digital infra, a game-changer
Despite the havoc created, the pandemic has offered a huge impetus to digital penetration throughout the country, which has accelerated in the unlock phase. Therefore, it is vital that the Budget draws out bold policy interventions to strengthen digital infrastructure which will eventually help in digitising the overall economy. In addition, considering the amount of data being created and stored across industries growing at unprecedented rates, especially after the lockdown, enhancing the security infrastructure to protect and manage data seamlessly should be another focus area. Last year, we witnessed multiple cyber-attacks and data breaches, which can prove to be a great loss for any organization or the economy as a whole.
Digitisation also means contactless, in many ways. This year, Digital India needs a broader focus with the pandemic leaving organisations with no choice but to go digital. In the post-COVID world, digital infrastructure will be a game-changer for companies and countries and therefore it is important we take timely measures to ride this wave correctly.
Another item on the finance minister’s list should be job creation, the targets for which are much steeper due to COVID-19 induced pressure on our economy. Construction, infrastructure and healthcare are some of the sectors which need incentivisation for creating more jobs to bring down the graph of unemployment. The finance minister can draw a sustainable job-creating roadmap for the healthcare sector, which was in focus in 2020 and is expected to remain on top of the list this year too. It could provide tax incentives and other concessions for setting up healthcare training facilities or utilise existing government-owned dispensaries and healthcare centres across the country.
There is a lot for the government to focus on Budget 2021. All we can do is remain confident that it will take all of these issues into consideration as they will play a role in getting the country back on its $5 trillion economy vision once again.
The writer is Founder and CEO at Flock