07 February 2020 12:09:32 IST

Budget is start-up friendly but ignores sports

While there is some hope, the Budget has mostly disappointed those looking for growth and upliftment

Right before the Union Budget, the question that lingered in most people’s minds was whether it would serve as an impetus for the current market. The Budget is no longer insured from public opinion, favourable or otherwise — many people took to social media to voice their criticism. While not all of them might be completely informed about all the policies, it is unfair to keep the common person in the dark about policies that directly affect them. The sentiment clouding the Budget seems to be mostly negative.

The new income tax regime has been one of the things widely talked about. For the typical salaried investor, this is unnecessary tedious calculations, with more arithmetic than I would prefer, to decide between the two options. However, what is important is to analyse is the possible spiralling effects this could have on the economy. Would this impact the savings and the investment culture? Highly probable, considering that certain investments were primarily tax-saving mechanisms for the salaried Indian, and now there is a viable alternative to opt for lower taxes.

The capital gains tax of 10 per cent on any gain above ₹5,000 is looked at as a blow for the individual investor — one that also led to the stock market and market sentiment crumbling. For a country in the middle of a severe slowdown, the Budget has been disappointing in terms of triggering demand.

The start-up push

All seems to be well for the start-up ecosystem, both in terms of deferment of employee stock ownership plan (ESOPs), which will help these companies acquire or retain the right talent, and the eligibility to claim 100 per cent profits deduction. In a war for talent, funds, and the much-needed acceleration to grow, start-ups seem to stand a good chance given the policies in their favour.

Welfare schemes and gendered budgeting have been a key focus of this Budget. It is important to note that while welfare schemes for women and minorities are allocated, they seem to be mostly under-performing in terms of application and spending. Various schemes have seen bare minimum utilisation of funds despite hefty budgets being set aside.

Incentives slashed

In the light of our sportspersons’ performance at the Rio Games and with the upcoming Olympics, it is surprising to see that incentives for athletes are slashed. While the Centre’s star programme, Khelo India, did see an increase in funding — it is hard to interpret how this would stretch to sports infrastructure, grassroots athletics, and other areas at large. Has the Budget for the Sports Authority of India (SAI) been slashed because some allocation from SAI has moved to Khelo India? It is still unclear.

What is encouraging is that the Centre has looked at negative externalities, and the measures to tackle pollution seem promising at an overarching level, such as the assurance to shut down plants whose emission goes above a certain level. However, it is hard to say if the government is effectively responding to the climate change crisis at the global level.

In the healthcare sector, in isolation, the increased allocations and emphasis on Ayushman Bharat seems heartening. The question is whether the tax on medical devices and equipment will result in a short-term increase for consumer spending on health.

Overall picture

Moving away from an individual level, the fundamental idea that progress and development would be rewarded seems to be reversed in the tax-sharing regime as southern States receive a lower share of the tax pie. Given this, the Kerala Finance Minister has called this a ‘war cry against the State.’ Criticising the Budget in general and the specific allocation to Kerala, in particular, the Budget is seen as a damper by most southern States.

While there is some hope, one cannot shy away from the fact that this Budget has mostly disappointed those looking for acceleration and upliftment in investments and market sentiment.

(The writer is a student at Indian School of Business. Views are personal.)