Atma Nirbhar Bharat, UnionBudget2021 & Freelancers
One of the first things Nirmala Sitharaman talks about the agenda of #Budget2021 is about building “Atma Nirbhar Bharat”
Taking the Sankalp of #IndiaFirst, the Finance Minister quotes – “Ancient India was the business epicenter of the world, and Atminarbhar Bharat is the expression of 130 crore Indians who are confident of their skills, and capabilities”
We are excited to see what the government has planned for freelancers, small businesses, and we are hopeful that this brings us good news. Here’s a short analysis of how the Union budget – 2021 affects gig workers, and small businesses.
One Person Companies –
In an effort to boost small businesses, and encourage entrepreneurship and innovation amongst Indians. Although the concept of One Person companies has been around for a while, the Finance Minister included some interesting modifications –
1. One Person Company can be registered with no restriction on Paid-up capital and turnover.
2. Allowing One Person companies to transition into any form of company with ease.
3. Non-resident Indians can register One Person companies in India.
The government is also working to put NRIs at ease, and do something about double taxation. If this works nicely, then the NRIs can invest in India, and this should allow more opportunities to be created within the nation ultimately leading to overall growth of the economy.
Small company Act –
India is the land of small businesses, and the Finance Minister has brought in some interesting modifications in the definition of Small business under the Companies Act 2013 –
- Threshold lifted from not exceeding 50 lakhs to not exceeding 2 crores
- Turnover not exceeding 2 crores changed to not exceeding 20 crores
This reduces compliance issues for small businesses, and impacts 2 lakh businesses directly, and perhaps many more indirectly.
The government has also extended Tax holidays that can be claimed by businesses until March 2022, and to incentivize funding in the startups it’s exempting capital gain taxes until March 2022.
These steps taken by the government indicate that it is focused on helping businesses establish, and flourish without having to bother much with paperwork.
Gig and contract works –
The Finance Minister said, “I propose to launch a portal that will collect relevant information on gig, building, and construction-workers among others. This will help formulate Health, Housing, Skill, Insurance, Credit, and food schemes for migrant workers.”
This portal if created and launched successfully will allow distributed and unorganized labor to come under a central umbrella, enabling the government to help these workers with added benefits such as –
First time ever in the history of India, the government has thought to extend some possible social security benefits –
- Minimum work guarantee or Minimum wage plans
- Insurance benefits – Special pans for Life, and health insurance
- Health Benefits – Gig workers don’t enjoy the benefits that people with fixed income do
Focus on Digital Payments –
The government wants people to transact digitally, and has decided to infuse 1500 crores to promote Digital Payments.
If the turnover of a business exceeds 1 crore, their accounts have to be audited. But for people who do 95% or more of their transactions online the limit has been increased from 5 crores to 10 crores. This reduces compliance challenges for businesses allowing them to focus more on doing business.
Credit Discipline, and NPAs(Non performing Assets) –
In an effort to bring back the money the government is owed, it’s taking actions in multiple forms to increase government revenue, allowing the economy to grow with surplus cash flow in the economy –
- To improve credit discipline while continuing to protect the interest of small borrowers, for NBFCs with a minimum asset size of `100 crores, the minimum loan size eligible for debt recovery under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002 is proposed to be reduced from the existing level of `50 lakhs to `20 lakhs.
- The Disinvestment Policy – The Finance Minister has asked NITI Aayog to suggest companies wherein the Government liquidates its assets in the Public sector Enterprises partially or fully. The government seems to be more aggressive in doing this.
Ancient India was the epicenter of global business, and the Finance Minister’s budget looked like the government is taking the reins to bring that glory back. Here are a few opportunities we have identified that can help small businesses, and gig workers.
The National Education Policy and the business potential it creates –
The National Education Policy holds a lot of potential that is waiting to be tapped by businesses across all fronts.
- Under National Professional Standards for Teachers (NPST) – The government wants to enhance the capabilities of 92 lakh teachers across the country. This is massive potential for businesses to develop programs to help the government execute this, and bring this plan in motion.
- Toy-based learning – The government finally understands the need to create engaging modes for children to learn, and with millions of children out there, there is massive potential for businesses to create educational and learning instruments
- Standardization of Indian Sign language – There are millions of people with hearing impairments, and educating this section of the society and allowing them access to the Indian economy would need innovative businesses to come forth, identify opportunities and build on them
Dedicated Administrative structure for the establishment of Multi-State Cooperatives
Amul is India’s largest cooperative society with an annual turnover of 5.1 Billion dollars in 2019-20, and with the government focus increasing towards the creation and management of these cooperative societies, the economy should get a boost, and the locally unorganized sectors should find a lot of help.
The Government is committed to the development of Multi-State Cooperatives and will provide all support to them. To further streamline the ‘Ease of Doing Business’ for Cooperatives, I propose to set up a separate Administrative Structure for them.
Manufacturing Sector –
“For a USD 5 trillion economy, our manufacturing sector has to grow in double digits on a sustained basis. Our manufacturing companies need to become an integral part of global supply chains, possess core competence and cutting-edge technology. To achieve all of the above, PLI schemes to create manufacturing global champions for an AtmaNirbhar Bharat have been announced for 13 sectors. For this, the government has committed nearly `1.97 lakh crores, over 5 years starting FY 2021-22. This initiative will help bring scale and size in key sectors, create and nurture global champions and provide jobs to our youth.”
Textile Industry –
To enable the textile industry to become globally competitive, attract large investments, and boost employment generation, a scheme of Mega Investment Textiles Parks (MITRA) will be launched in addition to the PLI scheme. This will create a world-class infrastructure with plug and play facilities to enable the creation of global champions in exports. 7 Textile Parks will be established over 3 years.
Road and Highway Infrastructure
Roads increase connectivity, and this increases the flow of information, goods, and services. This increase would allow establishments to develop alongside, and help the economy prosper, and grow by the creation of more opportunities.
More than 13,000 km length of roads, at a cost of `3.3 lakh crores, has already been awarded under the `5.35 lakh crores Bharatmala Pariyojana project of which 3,800 km have been constructed. By March 2022, we would be awarding another 8,500 km and completing an additional 11,000 km of national highway corridors.
National Language Translation mission –
We will undertake a new initiative – National Language Translation Mission (NTLM). This will enable the wealth of governance and policy-related knowledge on the Internet to be made available in major Indian languages. This would be an opportunity for content creators.
Overall the budget looks positive for businesses, and it seems that the government is working towards optimizing its resources and focusing more on small businesses.
Infact, Ancient India flourished because of millions of small businesses working in harmony and contributing to the overall success of the nation, and we hope this budget allows seeds to sprout, and prosper.