Budget FY18 has laid strong focus on transparency, governance, unleashing the power of youth. The robust framework presented by the Budget especially on digitalisation, tax reforms for MSMEs, and policy impetus for an entrepreneurial ecosystem can fiscally strengthen the economy and fuel the ‘Indian Dream’ of inclusive India.
The Budget has tried to holistically strengthen the less-cash economy to tidy the system, catalyse transformational impact and accentuate private capital through low-cost credit in order to pass the benefits to the bottom of the pyramid. Significant steps such as promoting the Unified Payments Interface, USSD technology for digital payments, Aadhaar Pay, Immediate Payment Service (IMPS) and debit cards will play a vital role in achieving the ambitious target of undertaking 2,500 crore digital transactions for 2017-18. This will also help small and micro enterprises by enabling greater access to formal credit in the long-term and attaining financial inclusion in true spirit.
Secondly, the policy impetus to MSMEs through the reduction in income tax to 25 per cent from 30 per cent for companies having turnover less than ₹50 crore, will provide a further thrust to the ‘Make in India’ campaign and catapult MSMEs to innovate, incubate and be globally competitive. Additionally, the companies with turnover of up to ₹2 crore, the Budget allowed the presumptive tax would be lowered from 8 per cent to 6 per cent.
With MSMEs being one of the largest employment providers in the country, constituting around 90 per cent of all enterprises, this policy reform will have a multiplier effect on the overall economy.
Thirdly, to promote the startup ecosystem, key announcements such as carry forward of losses, relaxation on promoter holdings and increased period for profit-linked deduction will position India as the most-promising startup destination.
The startups recognised under the Startup India policy can now claim tax benefits in three out of the first seven years under Section 80-IAC of the Income-tax Act, 1961. Earlier, it was three out of the first five years. This shall encourage more startups to register themselves under the government’s Startup India initiative.
Fourthly, youth-centric initiatives including the Innovation Fund for secondary education, the SWAYAM platform with 350 courses as well as the Skill Acquisition and Knowledge Awareness for Livelihood Promotion programme (SANKALP) will channelise and energise youth to reap benefits of economic growth and employment.
As energising youth through education, skills and jobs is one of the government’s 10 important focus areas, the Budget proposes to extend Pradhan Mantri Kaushal Kendras to more than 600 districts across the country, from 60 now.
The Budget also promised follow-up measures to the centring on the youth as the next phase of skill strengthening for industrial value enhancement (STRIVE) will be launched in 2017-18 at a cost of ₹2,200 crore.
For the first time, India is witnessing policy measures which are designed to transform the country into an inclusive, equitable power house with an innate focus on socio-economic growth. With the right impetus and adequately balanced socio-fiscal measures, a great beginning has been made and India will play an intrinsic part in this new world order.
The writer is the MD & CEO of YES Bank