Year 2020 has been challenging on the world economy, and the situation is no different in India. In February 2021, everyone in the country will be expecting the government to implement a structure that helps get the economy back on track. As the month for Budget 2020-21 nears, startup ventures in India have a few recommendations of their own.
If we compare the last four years of the country’s progress on the Global Innovation Index, India has advanced to the 48th position (in 2020) from 81st (in 2015) as the most innovative country. The rise in India’s ranking can be attributed to the startup companies. As of today, the government’s Startup India Initiative has recognised 38,756 startups under it.
However, in 2020, many startups lost fundings, faced investment deprivation and tax burden. Despite the financial crunch this year, entrepreneurs are looking for ways to do business efficiently with a beneficial tax structure in place.
In this section, we have put forth the expectations that citizens could have from India's Union Budget 2021. Let us begin.
We have enlisted the expectations that different sectors have from the upcoming Union Budget.
Since Chinese manufacturing has seen a significant drop in the world market, it is an opportunity for India to step in as a reliable supply chain manufacturer.
Overall, India’s Budget 2021 is expected to focus on boosting the growth of its economy. At the Reuters Global Investment Outlook Summit, 2021 - the Finance Minister of India - Nirmala Sitharaman said - “I would think 2021-22 will be very big, good traction year for achieving a really good rate of growth that itself is going to be a launching pad for 4-5 years of growing at a good speed, provided we do enough on the budget and spend on infrastructure”
The finance minister admitted that inflation is terrifying, and supply disruptions accentuate the issue. She also highlighted the fact that Prime Minister Narendra Modi’s meeting with global investors is crucial.
When talking about the income tax, she mentioned that the government has already extended several tax concessions for sovereign funds, which further gets linked to the National Investment Pipeline that has a significant multiplier effect.
Further, the Reserve Bank of India (RBI) has raised a proposal to allow corporates into the banking sector, which has been in talks lately. Talking about the distress in the corporate and banking section, Sitharaman stated in her interview with Times Now - “I am monitoring banks. Because we could extend timely working capital, many who could have faced severe stress have just held up. Many have gone back to business, and it is reflecting in the GST and PMI numbers. Banks are also open-minded. With liquidity being fairly easily available, stressed companies will survive.”
It would not be wrong to say that Budget expectations are high. Given the state of India's economy, the Budget 2021 will give the country a much-needed chance to get back on track once again. Implementing the aforementioned changes could well do the trick. It leaves to be seen if Budget 2021 lives up to expectations of everyone.
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