On Saturday, February 1st, 2020, Finance Minister, Nirmala Sitharaman, delivered the longest budget speech spanning 2.41 hours.
Startup founders, CHROs, CEOs were glued to their television and mobile screens to know what the FM had to offer. Some of them were happy with the budget, and some were confused.
After multiple announcements and allocation of thousands of crores, it is time to assess the Union #Budget2020. Reacting on the budget, Krish Iyer, President & CEO, Walmart India, said, “The rate cuts in the personal income tax rates would increase disposable income in the hands of the Indian middle class, which will enhance consumption through improved purchasing power."
Stating that the budget is woven around three prominent themes - 1) Aspirational India, 2) Economic development, and 3) A caring society. The FM introduced 16 action plans under this theme, to boost the fifth largest economy of the world.
Manish Sharma, President & CEO, Panasonic India & South Asia, gives a thumbs up to these programs that were announced. He said, "There is a positive outlook towards what the budget brings, particularly with regards to the decisions on simplification of GST filing, extending tax rebates on the personal tax bracket for people with income up to 15 lakhs. With an increase in disposable income, we hope this will drive consumption for the consumer durables industry too, which experienced flat growth in this fiscal."
Sharma also mentioned that further reduction in Corporate Tax for existing companies to 22% and for new at 15% and the abolishment of dividend distribution tax making India a more attractive destination for investments.
There's an allocation of Rs 35,600 Cr for nutrition-related programs in FY21 and a further Rs 28,600 Cr allocated in FY21 by the government for women-linked programs. Agreeing with the minister, Saundarya Rajesh Social Entrepreneur, Founder President, AVTAR Group highlighted that, currently, 24% of the workforce at MSMEs are women, the total employee count being 11 crores. Being the second-largest sectoral employer in the country, the potential for job creation in this sector is enormous.
He said, "The budget proposals to extend the MSME restructuring scheme by one year, allow invoice financing to MSMEs and provide subordinated debt to entrepreneurs are welcome steps. This will enable the MSMEs, who are bearing the brunt of reduced liquidity in the market, to grow and create more employment opportunities. This, in turn, will substantially contribute to increasing women's workforce participation rate in the country."
Previously, MSMEs with a turnover of over 1 crore were required to have their accounts audited. To reduce the compliance burden, the govt has increased the turnover threshold to 5 crores to audit books of accounts.
On the one hand, the industry leaders are praising the budget while on the other hand, they feel that the government needs to have a robust plan to execute these programs.
Dheeraj Khattar, Founder, MyMobiforce feels happy that the government is continuously focusing on skill development and in the current budget has planned Rs 3000 crores for the same. He said, "The challenge remains the end outcome- making these skilled workforce employed, self-employed or giving some entrepreneurship opportunities. The Govt has to be experimental in spending money for skill development. Skill development intends to develop the ability in people who do the associated job. Govt should find out some avenues where job or opportunity givers ( MSME or Enterprise ) have a higher stake in driving the training programs across the country and enables people to earn money.”
Better job opportunities
Irwin Anand, MD, Udemy India pointed out that the attempt to address the massive demand of teachers, nurses, paramedical staff, and caregivers abroad by focusing on skill-development is also good, and it will create more job opportunities.
The government will also set up a digital platform for seamless registration and capturing IPRs. To give a boost to the startup ecosystem, tax on ESPOs will be deferred by five years.
Ramki Gaddipati- CTO & Co-Founder Zeta welcomed the announcement of deferring the tax payment on ESOPs. He shared that currently, startup employees are required to pay tax whenever they sign up for ESOPs with a vesting schedule and also pay taxes on capital gains whenever they redeem their ESOPs. As a provisionary measure to this, the latest announcement deferring the tax payment by five years, or until employees leave the company, or when they sell their shares—whichever is earlier looks like a good move.
Ajay Shah, Vice President, and Head, Recruitment Services, TeamLease Services said, "These initiatives announced in this year's budget will boost the financial industry and will call for a new workforce that can support tech-enabled services. The NBFC reform for debt recovery will see the rebirth of the multiple NBFC players, and this, in turn, will lead to employment creation by the NBFC sector as well."
Every budget comes up with lots of hope and promises for the working class, small, medium and big enterprises. The Union Budget 2020 has some promising announcements in the area of people and work. HR leaders are keeping their fingers crossed for the upcoming months with new ESOPs policy, changes in personal and corporate tax slabs and significant announcement for skilling.