Budget 2023: Mass-pleasing and a big letdown for startups

The Union Budget of 2023, the last full one by the incumbent Union Government, was presented amid extraordinary anticipation from all corners. The numbers of the Economic Survey of India left one with both optimism and skepticism. Given the circumstances, it would have been quite a challenge to balance measures to tackle the immediate challenges while also keeping the public in good humour given that the nation is headed for general elections next year. However, since entrepreneurship and innovation are indispensable drivers of economic development, the Budget also had to boost their ascent. Let us take a look at how the Budget fared on all these counts.

Union Finance Minister Nirmala Sitharaman enumerated the seven priorities of the Union Budget as 'Saptarishi', encompassing inclusive development, digital infrastructure to aid the agriculture sector, the financial sector, infrastructure and investment, green growth, youth power and unleashing of potential. With a declared people-centric agenda and acknowledging India's G-20 presidency, the Minister emphasized the government's intent to build a technology-driven and knowledge-based economy. This had several dimensions, with regard to health, education and income, seemingly in response to the concerns around Human Development Indicators, which did not appear promising in the Economic Survey of India.

The Minister announced the establishment of 157 new nursing colleges, a mission to eliminate sickle cell anemia by 2047. As per the declarations that followed, facilities in select ICMR labs will be made available for research by public and private medical facilities and a new programme to promote research and innovation in pharmaceuticals will be taken up by Centres of Excellence. Alongside the increase in agricultural credit, promotion of tourism, fisheries and renewable energy and establishing a National Digital Library to create an accessible repository to boost a culture of reading were promised.

Some populist measures which take the spotlight away included raising of capital outlay for Railways, an increase in capex, a push for infra projects including 50 additional airports, heliports, water aerodromes, and advanced landing zones to be revitalised. Around 100 critical transport infra projects for steel, ports, fertilizer, coal and foodgrain sectors and the income tax rebate limit raised from Rs five lakh to Rs seven lakh. The number of tax slabs were also reduced, with for income of Rs 0-3 lakh being none the income between Rs three lakh and Rs five lakh to be taxed at 5 per cent, between Rs six lakh and Rs nine lakh to be taxed at 10 per cent; income between Rs 12 lakh and up to Rs 15 lakh to be taxed at 20 per cent and income above Rs 15 lakh to be taxed at 30 per cent. The Credit Guarantee Scheme for MSMEs has been extended with an infusion of Rs 9000 crore. The government, which estimates the fiscal deficit for FY 2023-24 at 5.9 per cent, aims to bring it down to 4.5 percent, the Minister asserted.

However, the startup world which was waiting for several direct interventions got fewer mentions this time around with some very notable steps. The startups were looking for a strengthening of the ecosystem with deferment of tax payments for startups, lower tax on long-term capital, reduction in the rate of MAT, expanding the definition of 'eligible startups' to extend tax benefits to newer startups among other demands, as reported by NASSCOM. However, instead of these very direct steps, the Budget included some long-term manoeuvres with a special focus on agriculture. The Minister announced that to unleash innovation and research by startups and academia, a National Data Governance Policy will be brought out, which will enable access to anonymized data. Furthermore, an agriculture accelerator fund is proposed to be set up to encourage agri startups by young entrepreneurs and a digital public infra for agriculture has to be built as what was described as an open-source, interoperable public good.

On the whole, the Union Budget this year comes with some very mass-pleasing steps and an overall commitment to developing infrastructure and technology, which can be crucial to the startup ecosystem. However, with proclaimed inflation in the prices of several commodities and with little directed towards the startup ecosystem, it remains in the zone of the skeptical optimism, the Economic Survey induced in my mind.

(The author is Founder & CEO

Upsurge Global and Adjunct Professor and Advisor EThames College)