Arun Jaitley's Union Budget didn't address key concerns of start-ups and SMEs
Budget 2017 has provided tax exemptions to small and medium scale enterprises (SMEs) and start-ups. SMEs got a drop of five per cent on the tax rate, which according to finance minister Arun Jaitley, would benefit 96 per cent of businesses.
However, what it doesn’t do is to come up with an energised plan to rejuvenate the ailing start-up world.
Investments have been falling whereas a majority from the start-up ecosystem continue to perform below par.
As many as 85 per cent of start-ups fail due to factors such as lack of a viable business model or financial crunch. The start-up and SME sector continues its battle against problems and issues in their everyday functioning.
The primary concerns of SMEs and start-ups remain unattended. The Start-Up India plan that was released with much fanfare has seen waning of interest.
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| As many as 85 per cent of start-ups fail due to factors such as lack of a viable business model or financial crunch. (Credit: PTI photo) |
What is needed is institutional reforms and better ease-of-doing business. These are the two steps that can increase the profitability of small businesses. start-ups and SMEs form the backbone of the Indian economy and employ over 40 per cent of the Indian workforce. There is an urgent need to stop them from going down the drain.
The government needs to understand the start-up world. It should without delay bring together various stakeholders of the sector and listen to their problems. Afterwards, it must formulate an action plan to address their concerns. The sticky points vis-à-vis rules and regulations have to be removed.
Jaitley should have taken measures in the Union Budget to improve the overall business climate. The country already ranks 130 among 189 nations on the global ease-of-doing-business ranking, released by the World Bank.
Budget 2017 was a good opportunity to improve ease of doing business or remove bottlenecks and challenges faced by SMEs and start-ups.
Additionally, the MSME sector continues to be unorganised and unregulated. They continue to confront institutional neglect. They face basic issues, including red tape, institutional apathy, and insufficient financial support. From the perspective of the SME world, this financial exercise should have done more to resolve key issues.
Crucial policy decisions are needed to provide a definitive direction to MSMEs and start-ups. Looking at the overall picture, the finance ministry has to go into the root of the problems faced by SMEs and start-ups. And for that a bold and dynamic plan would be required.