The new and aspiring India had voted Narendra Modi-led government to power in 2014. Modi with his track record of a successful chief minister of Gujarat fired the imagination of common man resulting in an absolute mandate to run the country. The whole world was looking at India with huge expectations and hope. In 2014, Modi was a challenger questioning the status quo and positioned himself as someone from outside who has come to drain the swamp. But, come 2019 he is the incumbent and has to seek mandate based on what he did during his tenure.
It is true that India is the fastest growing economy in the world (thanks to significant slowdown in China). It is true that the Finance Minister had managed to keep the fiscal discipline on track (even though Comptroller and Auditor General castigated the government for increasingly resorting to off balance sheet funding). It is also true that the government had brought in IBC to tackle the NPA mess with banks (even though the progress of resolution is very slow). Even the steps to tackle the blackmoney are more of rhetoric with little progress on the ground. Various schemes like Make in India, Start-up India, Swachh Bharat Mission, Smart Cities, among others, were mere marketing slogans with little impact seen on the ground.
The state of the Indian economy is mixed today. If you scratch the surface, things look very ugly. The rural distress is very high. Job creation is poor with unemployment reaching highest levels. The disastrous “Demonitisation” and botched up implementation of GST had impacted the SME sector big time. Private investments are at record low. Industry is running with record excess capacities. Tax terrorism is rising and impacting the ease of doing business in the country. The new and aspirational India wants focus on economy and sees with suspicion the communal agenda of temples and cows.
There is confusion whether the government will present a Vote on Account or a full-fledged budget. Presenting a full-fledged budget is against convention and also unethical as it goes beyond the term of mandate given to the present government.
The startup ecosystem in India is highly promising and is the third largest in the world. It creates lots of employment and is a key to India’s global leadership in technology.
The Angel tax had turned into a nightmare for startup companies. You have a bizarre situation where startups need to raise money to pay taxes rather than invest in innovation and growth. Both the government and tax authorities do not understand how the startup ecosystem works. The best way forward is for the government to scrap the Angel tax forever. There are several other laws to tackle the round tripping and benami transaction issues. The Indian IT services industry is a shining example of how we can take global leadership if government do not stymie their progress through unwanted regulations. The ease of doing business is a huge concern for startups and government should simplify the compliance. The recent ecommerce rules and the RBI’s policies on finch relating to P2P market place and designed to kill these nascent industries. The budget should, on a priority basis, address all the pain points of the startup industry and allow them the space to innovate and grow.
The 2019 vote of account or the full-fledged budget is the last available option to the government to correct the wrongs and make the ruling party relevant to electorate one more time. Currently, the mood of the nation is one of disappointment and despair.
(The writer is the former CFO of IT major Infosys)