NIRMALA Sitharaman’s first Budget, the first under Narendra Modi 2.0, was both praised and criticised by economists and experts. Some gave it thumbs up, others thumbs down. But what most failed to grasp was this was a typical ‘Dhanda’ Budget, a policy document to clear away the cobwebs that hinder the businesses of traders, small and medium firms, and foreign investors. It was a nuts-and-bolts budget, a nitty-gritty one, to make life a bit easier for these stakeholders. In effect, Narendra Modi hopes to transform India into a land of billion entrepreneurs. Remember his interview to Zee News, where he said that the pakoda-wala outside the TV channel’s office was profitably employed. Budget 2019 hopes to encourage entrepreneurship and self-employment to create hundreds of millions of jobs.
This explains why a huge chunk of Sitharaman’s proposals were aimed at start-ups, loans under Stand-Up India, new schemes for self-help women groups, small and medium businesses, foreign investors, both in stocks and companies, and traders and single-brand retail. She even targeted the small and retail investors; however, the combination of proposals didn’t gel with the stock markets, which largely tanked in the few days after the budget. Instead of grand schemes and policies to lure such sections, the finance minister focussed on the small but crucial problems that they faced at regular intervals.
In the case of the MSME segment, interest subvention and an increase in turnover cap for a lower corporate tax were part of an ongoing exercise. But what was more important was the decision to create a digital payment platform to hasten payments to government vendors and a dispute resolution-cum-amnesty scheme for quick closures of disputes in service tax and excise that are pending from the pre-GST regime. It is estimated that `3.75 lakh crore are blocked in such litigations, and most of the sufferers are the small and medium firms, which cannot afford to fight the government. Another boost to the MSMEs will come from the focus on traditional industries and ways to encourage farmers become part-entrepreneurs.
One of the difficulties that start-ups face is in the valuation of the shares, especially when the first-round angel investors sell their shares. The income tax authorities regularly trouble fledgling firms on the premium paid on these shares. Now, they will not be subjected to such scrutiny. The KYC (Know Your Customer) norms for foreign stock investors were eased and diluted, which will encourage their investments, both in the stock markets and new unlisted firms. Similarly, FDI norms are now simpler to woo money in grocery, e-commerce, food delivery, and fintech start-ups. The aim: unleash the entrepreneurial animal spirits.
The pension scheme will additionally benefit 30 million retail traders and small shopkeepers, whose annual turnover is less than `15 crore. To woo such people, only Aadhar and bank account details will be necessary to enrol; other required information will be self-declared. Similarly, one woman in each Self Help Group (SHG) will be entitled to a loan of `100,000, even as the Stand-Up India scheme will be extended from 2020-25. Clearly, the prime minister, who hails from Gujarat, understands the importance and implications of ‘dhanda’, a term popular in his state.
Can India, like China, emerge as an economic superpower on the basis of an entrepreneurial wave? This can only be a part of the solution. India has to take care of its farmers, and only the elite among them, can adopt business. It has to consider the needs of hundreds of millions of new job seekers, who are risk averse, and will not start a new business. It has to look at the economic needs of women, who today choose to stay out of the employment game.