Budget 2019: Looks promising for startups

By Kunal Varma

I would congratulate the Finance Minister on the Union Budget 2019. For a country like India, where we are trying to address multiple sensitive factors viz. jobs, taxation, corporate, rural, growth, spends, inflation, fiscal, etc., it’s always a very complex balancing act.

I was keenly awaiting the note on Industrial Policy, and I’m optimistic about what I see. We’ve come a long way from the 1st note on Industrial Policy in 1991, followed by the note on Manufacturing Policy 20 years later in 2011. The latest Industrial Policy subsumes the previous notes and is a strong move in the direction of GDP growth.

Making it easier for investors to operate FPIs is extremely important for us right now. Especially with the current scene in the bond market and the pressure on our fiscal deficit. We have bonds close to INR 5 trillion expected to mature in this FY20, out of which a large chunk is for the non-banking lenders. The recent news on defaults and apprehension of a further dip in credit ratings has made investors jittery. Hence the move to make FPIs simpler is a welcome move, which I hope helps in restoring confidence in the market.

The move on Angel Tax and reduced unnecessary scrutiny will be welcomed by younger startups that are raising angel money. Although there’s still a lot more to be done on this front, it’s a start.

Digital Push via a move like eliminating or reducing MDR for cashless payments further is a great sign. This decision has more positive implications than what’s immediately obvious. While it will make transactions more convenient, encourage payment Fintechs to innovate around this space and reduce cash pilferage, it also has a 2nd order positive effect of increasing the digital handshake between a consumer and the BFSI sector. Meaning that technologies like Blockchain and API based financial solutions get a solid, data-rich platform with all the digital transactions.

I’m happy that the farm sector got support from the Budget. With the slow monsoon onset this year and reducing farm incomes, we really need a fillip to this sector.

I have mixed feelings about the recapitalization incentive announced for our public sector banks. While I believe this was needed, I also see that is could further increase our fiscal deficit, in tandem with the ease in taxation, putting pressures on the government’s revenues. The added benefit, of course, is that market investors will get some confidence from this move in the short term.

Overall, I’d say that with all the geopolitical tensions, global trade wars and volatility in crude prices, India’s stance comes across as a defensive, slightly steady economy that is inching towards growth amidst all these challenges. Global investors could do with more of “steady,” rather than aggressive and volatile.

Let’s see how this fiscal plays out, and we’ll actually know the scorecard of this Budget. However, I’m optimistic about this Budget, and at MoneyTap, we’ll continue to help address the credit gap in our country in a responsible way.

Kunal Varma is CBO & Co-Founder of MoneyTap.