The 2021 budget was presented after almost a year of fighting the global outbreak of the pandemic. It was important to consider the needs of all sectors suffering from the financial collapse due to Covid-19. With a clear focus on macroeconomic development and recovery, the government has stimulated sectors such as infrastructure, health, MSMEs and start-ups.
In addition to propping up the economy, the 2021 budget provisions pave the way for MSMEs and startups to bolster the vision of the government of Atma Nirbhar Bharat, Startup India and Standup India.
In order to help the startups and strengthen the startup ecosystem, the one-person companies (OPCs) were able to grow without restrictions on paid-in capital and sales. This has always been associated with the transformation of the OPCs into other types of companies. Not only will this help increase the number of startups, but it will also help create enough jobs as more businesses emerge.
The budget has also given investors a breather by extending the tax break. The proposed extension of start-up tax vacation eligibility and capital gains exemption will greatly fuel startup investment in the country and contribute to the gradual recovery from the economic slump caused by Covid.
The allocation for the MSME sector has also been doubled in the budget as the Treasury Department has proposed increasing it to Rs.15,700 billion compared to Rs 7,572 billion in the last budget. This will be a great relief for the MSME sector, which has been hit hard by the economic decline. This allocation can also be used to add workers to the sector, which will help many people suffering from unemployment, resulting in holistic growth of the country.
In addition to increasing funds, the budget also provides impetus for promoting domestic manufacturing. This benefits locals of all walks of life and results in longer-term benefits even for those who have had to return to their hometowns, as they can find employment nearby.
The rationalization of import tariffs on duty-free goods and the lowering of tariffs on steel scrap by March 2022 shows the government’s intention to strengthen the Atma Nirbhar Bharat Mission. The rationalization of tariffs on the import of duty-free goods will give air to exporters of clothing, handicrafts and copper recyclers and boost domestic manufacturing, creating many opportunities for them and those who are likely to work.
All of the proposed announcements, as well as a specific framework for debt resolution for MSMEs, will allow them greater participation, greater growth and more jobs in the country.
One of the main proposals in the budget, which is very much welcomed by the sector, is the announcement of a revision of the definition of small business. The increase in the paid-in capital threshold from Rs 50 lakh to Rs 2 crore and sales from Rs 2 crore to Rs 20 crore will benefit nearly two lakh companies in the country. This will also help simplify compliance norms while also taking a huge leap in doing business.
All of these measures will not only help MSMEs and small industries, but also the startups emerging in health, education, ed-tech, digital and financial services as they will help increase business volume.
The stimulus for Atma Nirbhar Bharat and PLI (Production Linked Incentive) programs will make a huge contribution to the diffusion of many domestic manufacturing / processing industries and MSME ecosystems linked to them in the value chain.
The author is CEO and Co-Founder – Wonderchef
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