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The union budget 2021-22

Everyone is talking about it since Monday, isn’t it? Now tell me something, did you feel left out during these discussions? Did you ever ask yourself, why this is even important to you? Well, hi there! I used to face the same issues a few years back. This is when I started reading about the topics concerning the nation and society as a whole. Soon I found myself reading up for personal updates rather than any superficial discussion.  So, yes, I have the answers for you. 

See, the union budget is simply an attempt of the union government to keep a track of their expenses. In which sectors they want to spend and from which sectors they want to earn revenue. It’s a modest expense tracker for the nation.  

So why is it important to you? 

Well, 

• The budget helps you identify the sectors that the government is willing to invest in.

• Correspondingly you can plan your investments in case you are interested in stock market. 

• This also helps you plan your savings and financial outlay for the future.

• You can also plan for your long term savings once you grasp the effect of the budget on the interests and banking services.

• The best part is that it makes you aware of the economic growth and structure of the very nation that you live in and reflects the role that you play in it. 

Interesting, right? So, let me walk you through then.

The union finance minister, Mrs Nirmala Sitharaman tabled India’s first-ever paperless budget 2021-22 in the Parliament on Monday, February 1, 2021. The theme of this year’s budget includes economic revival, inclusive growth and the COVID-19 pandemic.

Before getting to the serious part, let’s get to know the fun facts first. Shall we?

What was new in the budget session?

This was the first time that the budget was presented or read out rather, from a digital format. The finance minister, Mrs Nirmala Sitharaman ditched the traditional bahi-khata or bougette this year.

Any diversion from the norm is always fascinating and hence I decided to share this with you.

Moving on, want to hear some cool facts about the finance minister, Mrs Nirmala Sitharaman? Yes, you do! Follow up!

The one with the finance minister

Trust me guys, this is a very tiny yet informative bit here about the union finance minister. You will love to flaunt this particular set of information during discussions. Well, I do. So here we go!

• Nirmala Sitharaman is the very first full-time female finance minister of India.

• This was the third time that she presented the budget.
• Her speech on the budget lasted for 112 minutes on the whole. 

Tell me, how cool is it to know these facts? 

Also, before presenting the budget, she quoted these lines by Rabindranath Tagore – “Faith is the bird that feels the light when the dawn is still dark “. 

What she meant was, the last year and continuing has been in the shackles of the global pandemic. However, even during these times, “India is well-poised to be the land of hope and promise.”

Mini-budgets and their connection with the union budget

With the global pandemic hitting the market in 2020, we all suffered to some or the other extent, didn’t we? However, the lockdown situation did hit the economy pretty hard. And that was obvious too, right? I mean, with everything shut out, what do you expect!

But the government can’t obviously sit back and say this. They needed to act! So what they did to handle the induced economic degradation, was that they rolled out a 30 lakh crore package. This package covered mini budgets that came out every 1-2 months during the lockdown, as per the demand of the situation. 

What’s the connection of this with the union budget, you ask? Well, the Hon’ble Prime Minister Mr Narendra Modi had announced that the Union budget for the FY 2021-22, would be a continuation of the mini-budgets that they released during 2020.

Have a look at the mini budgets:

• Performance linked incentives
• Boost for domestic manufacturing
• Better credit access for enterprises
• Moratorium on interest payments
• Focus on affordable housing
• Booster shots for MNREGA
• Atmanirbhar Bharat programmes

The government had also released V-shaped recovery graphs to show the revival of the Indian economy with the implementation of these mini-budgets. Have a look here:

The theme of the union budget 2021-22

This is a very delicate part here. The budget comes with a theme every year. The sole purpose of this is to connect with the citizens and provide them with a simple understanding of what the budget holds for them. Interesting, I know.

Want to know about this year’s theme? Well, it is undoubtedly and unexpectedly, Atmanirbhar Bharat. After all, the prime minister has been stressing on this since last year. 

To make our understanding of the union budget clearer, they categorized the budget into 6 pillars to focus on. Have a look:

• Health and well-being
• Physical, financial capital and infrastructure
• Inclusive development for aspirational India
• Reinvigorating human capital
• Innovation and R&D
• Minimum government and maximum governance

Now one thing is for sure, we are not here for an expert opinion on what the entire budget holds for the economy, right? We at TheCodeWork, are a tech-based product & services company that deals in the following industries, namely:

• Health care
• Startups /MSME
• Education
• Digital payment

THE BUDGET

So what we are going to do here, is discuss the chunks of the union budget that deals with the above mentioned 4 sectors. Correspondingly, we can draw a conclusion as to how it will impact niche companies like us and you as well.

You do not want to miss this, let’s begin!

• The center sponsored a new healthcare scheme, Prime Minister Atmanirbhar Swasthya Bharat Yojana to enhance the healthcare infrastructure in the middle of the ongoing COVID-19 global pandemic.

• The targets under this scheme include:
  • Boost the National Centre for disease control.
  • Set up urban and rural health and wellness centers.
  • Set up integrated public health labs in every district.
  • Allotted a sum of Rs.35,000 crore for COVID vaccines.
  • Distribute the Pneumococcal vaccine (Vaccine for Pneumonia) all over the country. This will halt the death of around 50,000 children annually.
  • Launch Mission Poshan 2.0, to enhance nutritional content among kids.
  • Construction of critical care hospital blocks

• Keeping in mind the health issues that 2020 inflicted on the world, the government has hiked the investment in the healthcare sector by 137% as compared to last year. 

I am sure you will agree with me when I say, this is a much-needed move by the government.

Startups / MSME

• The government has finally recognized one person companies as a valid startup. They have proposed to support and incentivise one member companies (OPC) from now on.

• The government has exempted the startups from paying the capital gains taxes for another year till March 31, 2022. 

• With the aim to create 1.5 lakh jobs for the youth, a FinTech hub will be set up in the GIFT (Gujarat International Finance Tec-City) at Gandhinagar.

• The centre will sponsor a welfare scheme for the tea workers of West Bengal and Assam. They have also allotted a sum of Rs. 1000 crore for this purpose.

The proposal to set up a top-notch FinTech hub in GIFT City at Gandhinagar is a marvelous prospect to connect the Indian FinTech businesses and startups to the global financial networks. Don’t you agree? Also, the Incentivisation of OPC is a much welcome move for the startup ecosystem of the nation.

Education

• The legislation is to be set up for higher education commission.

• As per the formulation of the National Education Policy, 15,000 schools will be reinforced and strengthened.

• In alliance and partnership with NGOs, 100 fresh Sainik schools are to be set up.

• The government has proposed to increase the allocation for ‘Eklavya’ schools for the hilly areas. Eklavya School is the concept bred by the government for residential schools for tribal children.

Now, don’t you think the aim to invest in strengthening 15,000 schools is a promising approach? With all the digital education platforms at present, it is pretty evident that education has become a hybrid concept in India as well as the world.

This is where the EduTech startups and businesses can ally with the government to help them achieve the goals of the national education policy in a better and faster way.

Digital Payment

• The cashless, digital mode of payment received a boost of Rs. 1500 crores. The aim is to improve, accelerate and promote the digital payments network in the country.

• The government has allocated a sum of Rs. 50,000 crore in the NRF sector to boost research in the respective sector.

With the investment of Rs. 1500 crore in this sector a huge number of prospects awaits the Fintech sector. Want to know the best part? This will lead to huge-scale digital financial literacy even in remote areas. Now that’s something really cool, don’t you think!

In addition to all of that, the funds will help to develop substitutions to the Zero MDR (Merchant discount rate) policy. Want a little bit of help with that? Well, in the budget of 2019, the government proposed that the companies having an annual turnover of Rs. 50 crore, must provide digital payment facilities to their respective customers. Easy, right?

How did the startups react to the national budget 2021?

Okay, so now that we have moved past the anchor points that hold the budget to the intent of the blog, let’s have a sneak peek at what some of the niche and early-stage startups have to say about the budget. Are you on-board? This will be fun, come on!

• The co-founder of UtterApp, Ninad Vengurlekar, has said that the one person company Incentivisation will help the aspiring entrepreneurs to set up their business in India. Also, the focus on digital payments will aid monetisation in the startup network of the country.

He has further commented that – “This policy would ideally work for hi-tech innovators who can now use this policy to build licensing agreements for their innovations in India, without the need for complicated processes of setting up a company.”

• The co-founder of Daftar, Sunanda Verma Bhatta, has said that the budget has been thoughtful about the startup ecosystem of the country. With the global pandemic in action, the startup ventures had been suffering. She says that the budget seems to have the potential to boost the network. 

She says, “The provisions like the extension of tax holiday and exemption of capital gains will help to boost the investment in the startups.”

• The Founder of Eadicct (tech start-up), Ashutosh Gawade, has commented on the one person company Incentivisation. His company is an OPC itself, so he is very content about this segment.

He says, ” I see a huge benefit for our start-up in the coming years as there will not be any tax audit and we will still take benefits of being a Private Limited company.”

Thoughtful indeed!

• The Co-founder of PawshBox, Malhar Katare, says that the capital gains tax exemption is a ray of hope in the badly hit startup market which is a result of the pandemic. He further says that the simplified financial resolutions are really handy for the early-stage startups as well.

He adds – “This support from the government will encourage an increasing number of students and young citizens to get aboard the start-up journey and in turn create more employment and create wealth.”

This looks promising, eh? The reactions, I mean! Let’s hope things turn out the way we all are expecting it to. Good luck to all of us!

Overview

So? How do you feel after reading the entire thing? A little bit more informed and woke, I hope! But if you are here with me till now, then, of course, I am assuming the right thing. 

With the overall analysis and reactions from people who are actually active in the market, it feels like the finance minister has delivered a New Year gift to all the start-ups here! They are welcoming the move of the Government shifting their focus and preference to the startup culture. Atmanirbhar, right?

If you happen to be a startup yourself, then let me introduce TheCodeWork to you! We are a bunch of dedicated individuals working as an agile team to deliver MVP or the minimum viable product to niche and early-stage startups. Reach out to us at TheCodework, in case you need one! 

We are here for you!

Happy brainstorming!