“The Budget was undertaken in circumstances like never before…” This opening statement of the Union finance minister in her Budget speech soon moved into overdrive on her promise of a “budget like never before!”
Overall, this Budget is certainly the most transformational one we’ve seen in recent times. It has been purposefully made for the new world order and a reset that has been kick-started with confidence, boldness, and the audacity to lead.
Making digital the core of nation-building
What is heartening is that digital has been made the underlying theme of the six pillars of leapfrogging growth. Budget 2021 hits the right chords of data and technology to fuel India’s ‘Atmanirbhar’ vision.
The launch of MCA21 Version 3.0 driven by data analytics, artificial intelligence, and machine learning; the massive push for fintech through the government’s support for the development of a world-class fintech hub at the GIFT-IFSC; the ₹1500 crore boost to digital payment and transactions; and the outlay of ₹50,000 crore for the National Research Foundation in next five years—these will undeniably strengthen our digital ecosystem, and open opportunities for the information technology sector to be a proactive partner in nation-building.
Enabling startups to takeoff
Although announcements in this area are incremental and not transformational, I am excited to see the fillip given to the startup economy, which is poised to become a powerful growth engine for the country. The increase in thresholds for both paid-up capital and turnover, and capital gains tax exemption for startup investment are welcome steps. The move to incorporate One Person Companies to grow without any restrictions on paid-up capital and turnover, allowing their conversion into any other type of company at any time, and reducing the residency limit are big shots in the arm for entrepreneurs. And we all know how start-ups have pushed the limits of digital, innovation and employment potential.
The extension of tax holiday by one more year, and the provision of ₹15,700 crore for the MSME sector (more than double of last year) will certainly enable small businesses to move ahead with confidence to contribute to the economy.
Adding thrust to infrastructure development
There is a focussed push to enable the manufacturing industry to be an integral part of the global supply chain. The government’s significant commitment in Production Linked Incentive (PLI) schemes to create manufacturing global champions will bring scale and size in key sectors and generate employment.
The three-pronged approach to infrastructure development—creating institutional structures, monetising assets, and enhancing the share of capital expenditure in central and state budgets—is a total approach. The comprehensive push to roads and highways, railways, power, ports, shipping and waterways, petroleum and natural gas, and urban infrastructure will create the right backbone for sustained growth and expansion of industries.
Increasing the permissible FDI limit to 74% (with the right controls and safeguards) in insurance companies will enthuse foreign investment.
A clear path to financing of infrastructure development has also been laid out through the monetization of public infrastructure assets—with the right dashboards to provide visibility to investors.
Catalysing education and skilling programs
An all-round focus has been given to school, university and higher education. The setting up of formal umbrella structures for better synergy between research institutions, universities and colleges is a great step towards this end.
Further, the amendments to the National Apprenticeship Act will enhance apprenticeship opportunities for our young generation of workers. The expansion of the apprentice programs and collaboration with globally-accredited institutions will build niche capabilities aligned to the emerging needs in the global world of work.
Nurturing a diverse and inclusive workforce
A strong emphasis has been laid on diverse employment generation—especially for contractual, gig, and platform workers. Close on the heels of the hugely reformative acceptance given recently for remote work, the extension of social security benefits for this workforce category will enthuse and draw out talent from across the country. This will further generate employment and firmly position India as a global talent hub. From a human angle, it will also provide assurance to contractual workers during uncertain economic cycles.
The firm commitment to enable women to work in all categories—including night shifts—with adequate protection and simplified but effective compliance will encourage a critical talent segment to enter the workforce with assurance.
Enhancing the ease of doing business
Ease of compliance is certainly a highlight of this budget across multiple announcements—especially the single-window compliance mechanism, simplification of the reconciliation mechanism for dispute resolution, the positive moves on direct and indirect taxes, reduction of the time-limit for re-opening of assessments, exemptions from audit and the relief measures for dividends.
All in all, this budget has generated a highly positive sentiment. There is a strong human touch too—health and well-being, education, affordable housing, and employment. As the Union Finance Minister so aptly put it, “This moment in history is the dawn of a new era—one in which India is well-poised to truly be the land of promise and hope.”
Views are personal. The author is Group CEO, WNS, and past chairman, Nasscom.