Finance Minister Arun Jaitely presented Union Budget today and made many announcements. Industry leaders were expecting several announcements but what the new budget will bring to us and what is the reactions of IT industry leaders. Let’s find out…
Gaurav Hinduja and Sashank Rishyasringa, Cofounders of Capital Float
“The Finance ministry has demonstrated incredible foresight. We appreciate that the Finance Ministry acknowledged the importance of digital lenders like Capital Float in aiding the growth of the MSME sector. As founding members of The Digital Lenders Association of India (DLAI), we met with the Finance Ministry, along with other leading Fintech lenders, last year and presented a whitepaper with recommendations to foster Fintech lending. We’re delighted to see those suggestions being incorporated in spirit and in letter. These include increased capital injection into the MUDRA Yojna up to Rs 3 lakh crores & doubling the allocation to the Digital India initiative. In addition, our request to access funds from MUDRA is also being considered by the Ministry, as they are reviewing the refinancing policy and eligibility criteria for NBFCs. We also welcome Mr Jaitley’s forward-looking approach towards adopting blockchain, which will play a crucial role in shaping digital payments in the country” said Sashank Rishyasringa, Co-founder of Capital Float.
“The Government and the Finance Ministry continues to identify the MSME sector as being critical towards increasing GDP & employment. The recapitalization of the PSU banks up to Rs 5 lakh crores and allocation of Rs 3 lakh crores in MUDRA loans ensures a higher availability of formal finance for credit-starved MSME segments. Another huge step towards boosting the growth prospects of MSMEs is the reduction of corporate tax to 25% for enterprises with a turnover of up to Rs 250 crores. The development of unique identities along the lines of AADHAAR for individual enterprises will enable us to further our efforts towards financial inclusion, as we can extend digital credit services to MSMEs with little to no documentation. The extension of Kisan Credit card to fisheries & animal husbandry farmers and the allocation of Rs.10,000 crore for fisheries & aquaculture, animal husbandry funds further adds to the Government’s efforts towards absorbing more segments into the formal financial ecosystem”
KK Mookhey, CEO & Founder of Network Intelligence
“The move to make cryptocurrencies illegal is a major announcement; it is likely to create a negative impact on the price of these currencies, especially Bitcoin. A better idea may have been to come out with some sort of a regulatory framework around cryptocurrencies. On the other hand, the point raised by the Finance Minister about exploring the usage of blockchain technology for payments is a very good initiative. It will support homegrown technologies who have already invested in the technology and will attract new investments in this technology. It is a positive sign to see that 5 lakh wifi-hotspots will be set up covering 5 crore rural citizens. This falls in place with the country’s Digital vision. We would have liked to see more substantial movement on setting up the CERT-Fin for the financial sector.”
Avneet Singh Marwah, Director and CEO of Super Plastronics Pvt. Ltd. (Kodak HD LED TV India)
“As I have been reiterating over the last couple of years, the Indian Government should focus on health and education. Finally ,in this budget the government has introduced the World’s biggest health scheme; providing up to 5 Lakhs of medical care ,free, in hospitals. This will certainly go a long way in uplifting the standard of living in India, which is always beneficial for the economy. Apart from this, the Government has focused on infrastructure development, specially housing.
Coming to our industry, that of consumer electronics and manufacturing, the Government is very determined to ensure the success of the Make in India initiative. Therefore we welcome our Finance Minister’s decision to increase custom duty on CBU of television, which is a good sign for boosting the domestic industry. We hope the Finance Minister will also reduce GST on television to 18% subsequently.”
S. Sundararajan, Executive Director at i-exceed
Quote on Artificial Intelligence
“The Government’s initiative to accelerate research in artificial intelligence (AI) reinforces our belief that AI would revolutionize the way financial institutions and customers interact with each other. This would add a new dimension to the digital transformation of our economy and expedite our march towards Digital India.”
Quote on Inclusion
“With 5 lac wifi hotspots proposed to provide data access to 5 crore people in rural areas, we can expect a surge in mobile Internet usage. This is a great step towards financial inclusion as more people from rural areas would now have access to digital products and services.”
Shailendra Naidu, CEO, OBOPAY
“Government’s decision to encourage blockchain in payments sector is a welcome measure. The decentralized technology will help simplify the ecosystem, mitigate security concerns and build a trustworthy network ensuring data integrity. Elimination of intermediaries and overhead costs will help in reduction of transaction costs. The ability to make data transfer simpler and easier between entities would encourage adoption of block chain as a preferred technology across industries. Blockchain with strong support from government would help reshape the way businesses transact and fuel the digital initiatives.”
Sanjay Swamy, Managing Partner, Prime Venture Partners
“SMEs and consumers have a massive credit gap – digitisation & collaboration between government, PSU, Private Sector and Startup ecosystem is key – and am glad to see specific initiatives address these aspects. ”
“Government should do more to encourage fintech/startup ecosystem – and one of the most important ways is to by becoming an early adopter of these solutions.”
Vinay Bagri, CEO and Co-Founder, NiYO
“Very good budget directionally for salaried class. The introduction of standard deduction and rationalization of Medical benefits are commendable steps towards making all interaction between employee and employee digital.”
Sachin Gupta, CEO and Co-Founder, HackerEarth
On employment and education
“The budget’s focus on healthcare and agriculture indicates that it’s largely structured to benefit the rural economy. There are few initiatives that impact corporate India and even fewer aimed at startups. However certain initiatives aimed at employment such as PF contribution by government and talent development through education grants are highly welcome.”
On Digital India
“There is a massive transformation that’s happening across industries primarily led through technologies like AI, IoT, Big Data and others. India has the unique opportunity to drive these innovations for business across the globe but it needs a concerted effort to create skilled talent. The move by the government to focus on these technologies through Digital India is appreciated.”
Bala Parthasarathy, CEO and Co-Founder, MoneyTap
“I believe that the 2018 Union Budget would have an overall positive impact on the FinTech and Financial Services sector. It is obviously a complex act to balance multiple factors such as our Fiscal deficit targets (that stayed around 3.2% this last year), GDP growth, unemployment rates, boost to our manufacturing sector and all of this in the backdrop of balancing inflation and the recapitalization of PSU Banks. The govt. is giving a strong push to domestic manufacturing, especially with the 372 new business reforms for improving ease of business. This may also show a further rise on consumption side. Both of these factors put together would facilitate a healthy retail Credit growth. It’s possible that a lot of this credit growth may come from the private sector banks, which is a good thing as digital and technology adoption is higher with these banks.
Some smart phones prices may go up, but with the push on domestic manufacturing and ease of doing businesses, we may see more phone variations coming out in the market across price points. So smartphone penetration will probably continue to see a rise and further help the various Fintech services (such as wallets, lending products, PFM’s etc.) that are built on smartphone apps and mobile protocol stacks.
The focus on cleaning up balance sheets of over-leveraged PSU banks and resolving NPAs should ease cash flow burdens of these institutions and is a good signal for enabling business growth. This should encourage higher adoption of cost efficient lending practices which is the strength of FinTechs in the lending space. So Fintechs would benefit from this either as direct lending or increased collaboration with banks. On the flip side, the exchequer might also see some spending pressures.
As the GST adoption picks up and new initiatives around blockchain, ML and AI see R&D spends and adoption from the Govt. as Mr. Jaitley pointed out, technology will start playing an even bigger role in driving cost efficiencies and increasing revenue for BFSI and FinTech players.
It will be interesting to see how the whole cryptocurrency piece plays out as the govt. has a skeptical view of that.
Overall, I think the budget is going to give a strong push to our economy in the right direction of technology adoption, higher ease of doing business, enabling consumption and credit growth and making us a more digital savvy society.”
Adhil Shetty CEO and Co-founder BankBazaar
Views on Insurance
“Rs5Lac is a great mediclaim amount and 50 Cr individuals is a great target. This will create tremendous awareness for medical insurance in the same way as Jan Dhan which ensured every Indian to have a bank account. This will push for every Indian to have medical insurance. On life insurance the PM Jeevan Jyoti Bima Yogana including Rs 2Lac Life cover is being pushed across a larger base which is a great sign. Rs 2 Lac critical cover is also being extended to a larger base.”
Views on Taxes
“Reduction of corporate income tax for companies with revenue up to INR 250Cr is a big announcement and will benefit more than 99% of the companies in India. The framework is still to be analyzed to qualify the benefits. Another announcement on standard deduction of INR. 40,000 for salaried class is a great step to simplify the taxation process. Though the effect would not be much as the 40k deduction in lieu of medical and travel allowance effectively only means INR 40k- (15k+9.6k existing ) which is only INR 15.4K extra non-taxable income. At 20% tax slab, it is approximately INR 3080 in hand for full year. This will further get reduced because of the increase in health and education cess of 1% on tax (existing 3%) which means only approx. INR 2000 in hand per year increase”
“The budget overall is positive. There is visible support for Fintech industry as the FM specifically mentioned that Fintech is playing an important role in countries growth and hence announced setting up a working group for its growth. The biggest announcement was about insurance and Rs5Lac is a great mediclaim amount and 50 Cr individuals is a great target. This will create tremendous awareness for medical insurance. Also, reduced corporate income tax for companies with revenue up to Rs250Cr is a big one. There are couple of points which will raise questions. The 3.5% fiscal deficit in FY18 and 3.3% fiscal deficit target in FY19 is slightly higher than expected which will impact the borrowing cost for Private sector. Second, introduction of tax on LTCG exceeding Rs. 1Lac after 14 years.”
“The announcement of the LTCG on equity investments and 10% DDT saw the Sensex plunge 1% within minutes. However, the markets seem to have recovered immediately signalling that equity investors — including mutual fund investors — would absorb these blows and keep investing as per their financial objectives. After all, equity remains one of the best-performing asset classes.”
Vinu Cheriyan, CFO & Director Operations at Sennheiser Electronics India Pvt Ltd.
The Finance Minister today laid out a powerful report card by referring to the commitments made by him with regard to nine key focus sectors. This Union Budget 2018 offers a decent balance of thrust to all the core areas and fiscal prudence. The Budget surely was intended to bring in a lot of optimism and I think the government has clearly defined its intention to revive the rural economy with their spending allocated to the segment, including the skill based education, healthcare, housing and infrastructure development which will generate income in the rural areas.
The reduction of corporate tax to 25% for the companies below 250 crores, will certainly bring ease of doing business in the economy. The allocation of INR 3073 crore was much expected after government’s emphasis on demonetization towards making India a digital economy. The allocation of over INR 10,000 crores for building Wifi Hotspots for the rural India, is surely a welcome move and will further strengthen the Digital India vision of the government. 2017 was significant for the telecom sector as India skipped from 2G to 4G with all the telecom players focusing on 4G. The focus on creation and augmentation of telecom infrastructure in 2018-19 and efforts of government towards 5G is really applaudable. The focus on manufacturing and the impetus given to skill development were much needed for job creation.
This budget has been a great initiative keeping in mind the various obstacles in the growth of our economy. We wish our Finance Minister a great luck for the successful implementation of Budget 2018.
Priya Mahajan, Head of ASPAC Public Policy & Regulatory Counsel, Verizon Enterprise Solutions
We welcome the focus of the Union Budget on disruptive technologies such as Artificial Intelligence (AI), Big Data, Internet of Things (IoT) and Robotics. With the renewed focus on Digital India, we hope that the Government of India also consider additional reforms to the telecom sector. Reforms that will create a predictable, flexible, lightly regulated and reliant on technology policy framework that incentivizes the businesses to invest, reinvest and to compete in India’s telecom market on a level playing field basis. Reforms that will also provide consumers with greater choices to modernize and simplify regulations for all stakeholders. We are also encouraged that the government is considering series of initiatives to empower the Indian citizens with broadband access thereby bridging the digital divide. Broadband access will spur demand for digital services and usher in a new era of digital revolution, establishing India as one of the most robust ecosystems for investment and innovation in the world.
Abhesh Verma, COO nexGTv
“The Finance Minister has doubled the budget for the Digital India Scheme, emerging as a major move towards assisting the nation to progress further. The second development of investment of Rs 10,000 crore for rural Wi-Fi hotspots, giving 5 crore citizens access to broadband speed internet by the deployment of 5 lakh Wi-Fi hotspots should help bring more consumers online, increasing digital consumption of services like OTT, entertainment, banking, and e-commerce. We at nexGTv feel that all these steps are a definite plus for the significant growth of the digital businesses in the country.”
Ambika Sharma- Founder & MD, Instappy
“The latest budget announcement holds great promise. I am particularly enthused by doubling the allocation to Digital India to Rs 3073 cr for the 2018-19 fiscal and. This move will empower the society in areas like broadband and mobile connectivity and government services on demand and will help the country’s vision to be a digital-first economy.
Furthermore, the allocation of INR 10,000 crore for the 5 lakh WiFi HotSpots to provide Broadband access to 5 crore rural citizens is also promising. With nearly 70% of the country’s population living in rural and semi-urban geographies, the move will give the vision of a ‘Digital India’ a big boost and provide businesses an opportunity to upscale.”
Ishan Singh, MD & Founder, RevStart and Active Angel Investor
The budget has not addressed some pain points of the Indian start up sector. The issue of Angel tax was not addressed directly and we will have to see the published budget documents for clarity on the same.
As for the good points – With regards to credit extension to small and micro companies, the Mudra Yojana seems a step in the right direction but the fine print of the same needs to be seen carefully to understand widespread execution. There has been a advocacy for push for technology in education, due to which I foresee increased opportunity for Ed-tech firms.
The announcement for more use of artificial intelligence (AI) is promising, and it can lead to a flourishing AI sector in India. Companies in the network infrastructure space will continue to find business with the agenda of ‘smart cities’ and the provision for broadband and wifi hotspots. The thought of implementing blockchain technology is a welcome move and I hope it will be used in the area of land records and digital identification.
Overall, the budget showcases moves in the right direction but hasn’t brought in any drastic measures to help the Indian Startup ecosystem. The efficient execution of these policies should be the difference maker.
Ranjit Punja, CEO & Co-Founder, Creditmantri.com
“Digitisation and formalisation seems to be the mantra, with the Finance Minister stressing on the growing digital economy and increased allocation to aid digital transformation. The government initiating a new plan on NPAs also shows the importance of rising bad loans with India currently ranking 5th in the world. We hope that this plan would help shift focus on the importance of good credit as a countermeasure. By setting the target of disbursing Rs.3 lakh crore through the MUDRA Yojana for the next fiscal is a commendable step towards inclusive funding.”
Rohit Lohia- CO-Founder and COO, CoinTribe Technologies Pvt. Ltd.
“Allocation of 373 cr in digital India initiative is a welcome step in the direction of reducing cost of operations for all businesses sytemically while greatly aiding the ecosystem for FinTech enterprises. Further, MSME corporate tax for 2018-19 has been cut to 25% up to revenue of Rs 250 cr. This is likely to encourage larger tax compliance from MSME sector.”
Satyam Kumar- CEO and CO-Founder, Loantap
“We are happy that Finance Minister has acknowledged voice from Fintech Industry seeking soft touch approach to regulation and making strong case for fintech participation in supporting SME/ MSME growth. Fintech as a segment has been signalled out in this budget with a very clear objective of credit push to the last mile. We see it as strong government backing for the way fintech industry is shaping in India.”
Gaurav Agarwal, Managing Director, India & SAARC, Symantec
“The Government of India has made great strides towards digital enablement over the last few years. This year’s Union Budget further validates their strong focus on leveraging the best of technology to enhance socio-economic equity, capital and capacity within the country. Setting up of half a million Wi-Fi hotspots, and push for digital payments are definitely positive signs.
However, in the accelerated hyper connectedness which also includes critical infrastructure sectors like banking, energy and telecom coupled with government’s keen interest to explore technologies such as AI and blockchain, it is essential to ensure adequate investments are made towards cyber security and data protection.
Recent large-scale, sophisticated attacks have underscored the importance of cyber security tremendously, and therefore government departments and agencies should consider allocating at least 8% of their respective technology budgets for strengthening their cyber defense.”
Aakrit Vaish, Founder & CEO, Haptik
Allocation of significant fund and announcing efforts to enhance research in disruptive technologies like Artificial Intelligence (AI), Internet of Things (IoT) and Robotics implies that the importance of adoption of such technologies has finally been taken into consideration by the government. With NITI Aayog to establish a national programme for artificial intelligence, this will not only significantly aid job creation but will also assist the government to move towards its Digital India vision.
Neeraj Sharma, Country Head – Spreadtrum India
“The increase in the customs duty on imported mobile phones is a great move which will boost the ‘Make in India’ campaign by promoting local manufacturing. The government’s focus on the new digital technologies will help lead to a empowered digital society and a knowledge economy”
Atul Rai, CEO and Co-founder, Staqu
This year’s budget not only takes significant steps towards the Digital India vision but also towards inculcating the latest technologies like Artificial Intelligence for the national development. With NITI Aayog to establish a national programme for artificial intelligence, we look forward to supporting the nation with R&D support and more programmes like ABHED which is already assisting the Polices forces with AI capabilities. With the advent of new technologies and the Indian government being equally eager to adopt them, we strongly foresee the nation to be on the road to transformation and emerge as one of the leading Digital Nations on the world map.
Prabhakar Chaudhary, MD – HAL Robotics
“Emphasizing Digital India powered over AI and by allocating substantial fund, this government has seriously understood the need and capability of technology. It’s great to see that government is recognising future technology for building nations future. Not only this helps in job creation but also advances the nation in competitive global space”.
GB Kumar, Vice President – India and APAC at Prysm Inc.
“The one key takeaway from Union Budget 2018 is clearly the envisioned rise of India as a connected and technology-driven nation. There is a clear focus on creating a digital economy through sizeable strategic investments in developing the requisite infrastructure. With the government’s enhanced commit to the Digital India scheme – an allocation of INR 3,073 crore, and the successful selection of 99 cities (out of 100) for the Smart Cities initiative – we believe we will see expedited implementation of Connected Cities. Another commendable announcement was the allocation of INR 10,000 crore to the Bharatnet project and establishment of 5 lakh Wifi hotspots in rural geographies. The government’s announcements that promote digitization through greater connectivity, will fuel uptake for collaboration and remote working solutions resulting in a more productive and connected India.
We hope Government will actively encourage emerging technologies such as block chain. This is important for Indian tech industries and start up ecosystems to flourish. Overall, it is a progressive budget, something that puts the onus on the Indian Information Technology industry and also benefit from.”
Manav Jeet, MD & CEO, Rubique
“Today’s budget announcements are certainly creating a headway for India to become the largest digital economies in the world. Right from ploughing the seed of digital in education, creating the infrastructure to connect villages to encouraging establishment of advanced technologies like Artificial Intelligence including research and development through Niti Ayog’s national programme will certainly help the existing market move towards digital.
Providing Infrastructural Support to MSMEs: MSMEs have been the focus even for Rubique. It’s the most important sector yet underserved segment when it comes to access to finance. Allotment of Rs 3 lakh crore for lending in FY 19 under PM’s MUDRA Yojana for MSMEs definitely bring cheers to them. Also government’s initiative to focus on process digitization & easing the loan sanctioning process will help & encourage the emerging fintechs like us which are taking efforts to digitize the ecosystem with increased acceptance by the ecosystem.
Focusing on Digitizing Banking: Although these initiatives will definitely help Fintech companies like us expand & help bridge the credit gap for MSMEs, we are also hopeful to see government coming up with special tech measures to bring out e-signature facilities within banks and enable access credit digitally removing the need for paperwork which usually delays the disbursal.
Bringing innovative tech support like Blockchain: We are yet to match the security measures implemented in developed countries, hence the decision to eliminate the use of cryptocurrencies and encourage the use if blockchain in payments sector is definitely a wise decision by the government. Although several banks have started adopting blockchain technology within their existing infrastructure, it will be note-worthy to see how this tech implementation is going to shape up the financial inclusion of the country.”
Arun Gupta, CEO and Founder of MoMagic Technologies
“This budget has recognized the importance of artificial intelligence, machine learning and robotics as tools to further growth at national level. Niti Aayog’s plan to establish a national program to direct efforts in artificial intelligence is a welcome move which will push investments and research in this space and will put India on the right path tech for innovation,” Mr. Arun Gupta, Founder & CEO, MoMagic Technologies”.
Arun Rajamani, Country GM, Pluralsight India
“India has been slower to adopt technology in learning than other countries. We have observed that technology-led learning is highly effective in closing the skills gap. It is encouraging to see that the FM has announced an initiative to digitise teaching methods in India.”