MSEs, Startups and salaried middle class these three segments have been traditional vote bank of BJP and their supposition with government were very high. In the last 4 budgets barring few initiatives nothing substantial have been done for these three segments. Micro and small enterprises have been affected most by demonetization and GST implementation. They have been traditional vote bank of BJP and yet they suffered a lot.
This interim budget 2019 is the last opportunity for government to win back the trust of their core vote banks. Government has realized its mistakes and has been taking various steps to ease out their pains, but it is still proving to be insignificant. As we are heading closer to 2019 Lok Sabha elections, all these three segments are looking at the government to bring some hope.
Following are the outlook expected by MSEs, Startups and salaried middle class:
Micro and Small Enterprises
MSEs construct about 65% of the enterprises of India and contribute around 20% of the overall GDP. MSEs are a major source of employing workforce. Getting access to institutional credit has been one of the major problems of the MSEs. Though government has been allocating lot of budget through Mudra Yojna to solve this problem, but like any other government initiative, implementation on the ground has not been that effective. It is high time, that government should look at various financing option like Peer to Peer Lending platforms to solve this problem. P2P Lending platforms have huge potential as they can channelize inert wealth of Indian middle class to this sector.
To encourage retail investors to participate more in lending activities at P2P lending platforms, the interim Budget shall waive off tax on the interest earned by an individual investor through P2P lending.
Startups have had lot of hope from Modi government after Start-Up India initiative. But this initiative also turned out to be just like any other government, which asks you to fill lot of forms and meet lot of conditions to get any kind of benefit. Being part of start-up community, I know for sure that very few serious startups got registered with this initiative. Genuine start ups just need government to provide some relaxation in terms of ROC compliance and traditional documentation and income tax on funding rounds.
Instead of focusing their energy on making their products better and reaching out to more customers, startups have to deal with old age processes and systems meant for traditional companies. Last year many startups received notices under Section 56(2) (vii b) of the Income Tax Act from the I-T department to pay taxes on angel funds raised by them. The government on January 16 has given some relief and eased the procedure for seeking income tax exemption by startups on investments from angel funds and prescribed a 45-day deadline for a decision.
Startup community is hopeful that government will decisively address all the concerns revolving around this issue in the interim Budget.
Salaried Middle Class
Income tax slab for individuals has gone through almost very little change in four years of NDA -government. Salaried middle class is hoping that government will simplify income tax rules and reduce tax rates. In this budget, government must give tax benefits to middle class. Recent, upper caste reservation rule classify families earning less than 8 lakhs as poor. It is high time that government exempt people earning less than 8 lakhs from income tax. Also, 30% tax rate should apply only to those earning Rs. 25 lakhs plus annually.
It is going to be the final budget presentation by Modi government prior to the 2019 Lok Sabha elections, and government must not lose this opportunity to win back the trust of their core vote banks.
Raghavendra Pratap Singh, Co-Founder, i2iFunding