Except for the announcement of setting up a National Centre on Artificial Intelligence, the Indian startup ecosystem did not have much to cheer about in the interim budget 2019.
Finance minister Piyush Goyal said the country was proud of the hard work and innovative ideas of youths in the startup sector, who have become job creators from job seekers, but he steered away from addressing the demand for quashing of “Angel Tax”, which has been a major source of headache for entrepreneurs.
It has to be kept in mind that this budget comes just weeks before the country goes to polls to elect the new government. In tune with this, it has been announced that citizens having taxable annual income of up to Rs 500,000 will get a full tax rebate. This will encourage spending among the middle class, especially youths who entered the job sector recently. The tax slabs for remaining income groups remain the same.
Aakrit Vaish, CEO and co-founder of Haptik, an Al-based conversational platform, called the budget forward-looking, and said, “With the announcement of National AI portal, we expect India to be propelled on the path of leveraging advanced and disruptive technologies for economic prosperity and growth.”
Goyal said the government’s goal is to become a USD 5 trillion economy in the next five years and a USD 10 trillion economy in the next eight years thereafter. Just a day earlier, Business Standard reported that India’s unemployment rate hit a 45-year-high of 6.1% in 2017-18, as per the periodic labour force survey of the Ministry of Statistics and Programme Implementation. The report is yet to be made public. However, the finance minister painted a rosy picture of the things to come, saying that youths will lead the government’s vision to create a Digital India that reaches every sector of the economy “with innumerable startups and millions of jobs in this ecosystem”.
Goyal pointed out that consumption of mobile data has increased by over 50 times in the last five years, and said in the next five years the government will turn 100,000 villages into digital villages. The government also plans to expand rural industrialisation by using modern digital technologies. “This will be built upon the Make in India approach to develop grassroots level clusters, structures and mechanisms encompassing MSMEs, village industries and startups spread in every nook and corner of the country.” Goyal said.
Paresh Parekh, partner in Ernst & Young’s Leader Consumer & Retail Tax, said the following three changes mentioned in the budget speech are potential game changers for the consumer sector and economy — one, higher personal disposable income due to higher tax rebate for up to Rs 500,000; two, higher rural disposable income because of farmers’ package and interest subventions; three, real estate and housing sector proposals like no notional tax on second home, capital gains tax exemption for two homes and no notional tax for unsold real estate inventories up to two years.
Jaijit Bhattacharya, president of the Centre for Digital Economy Policy Research, said the budgetary provisions pointed towards a social focus “The sops for middle class would put more money into the hands of citizens, increasing their spending power and increasing consumer demand.”
Krishna Kumar, founder and CEO of Simplilearn, an online education platform, said he expected the government to pass on some benefits to the ed-tech and skill-tech sectors by extending tax benefits and incentives. “It is heartening to see the government’s continued efforts to further the digitisation agenda. While the move will help India enable millions of jobs in the next few years, it should also address the need of getting the current talent pool global-ready for tomorrow.”