A great wellness pill but wanting in therapeutic interventions
“The Budget has substantial incentive for startups and small to medium businesses; and the move to expand the 25% tax rate to companies with revenue upto Rs. 400 crore is commendable. The
measures to support the startup landscape – particularly eliminating scrutiny on capital gains in the case of angel tax and expanding fair market value justification exemption to Category I AIFs could help strengthen the funding ecosystem in the country.
However, I would have liked to see greater reflection of fund allocation or tailored program announcements to support the Make in India and Ayushman Bharat programs, marque initiatives of Prime Minister Modi that are particularly relevant for companies across the continuum of pharmaceuticals, biotechnology, medical devices, diagnostics and healthcare delivery. If the lofty vision of Ayushman Bharat is to be accomplished, implementation budget and plans should be progressively and substantially bolstered. With the exception of incentives to multinational companies for creation of mega manufacturing parks, there is no meaningful reform to foster scaling of Indian manufacturing footprint, especially in sectors that are still heavily import dependent such as medical devices.
Additionally, given the crossroads the pharma and biotech industry is at today, it is also critical that there is encouragement for multifold increase in level for research engagement. There are no tangible provisions in the budget that will help substantially elevate competitiveness of the industry.
Overall, the budget is in my view a good wellness prescription for the overall economy but lacks specialist’s clinical interventions in specific parts where the economy’s health is relatively poor and needs an injection of support.”
Steering away from populist reforms with holistic focus on economic growth
The Budget of July 2019 provided an exemplary overview of the way forward for the Modi Government. The Budget elementally reflected the overall growth vision rather than extensive elucidation of reforms.
Announcing a slew of measures at her maiden budget, Nirmala Sitharaman focused on fostering
steep economic growth, increase in Foreign Direct Investments (FDI), reforms to increase job opportunities, increase in disinvestment, the strategic sale of loss making companies which helps the government to benefit from periodic infusion of funds. We are also encouraged by the focus on improving overall health of the economy by recapitalizing banks. The encouragement to the corporate sector with expansion of the 25% tax rate to all companies with revenue less than Rs. 400 crores is commendable as well.
The budget is also very promising for start-ups – the additional capital gain exemption, reducing scrutiny on angel tax and extending valuation justification exemption to Category 1 AIFs are all likely to strengthen the funding ecosystem and simplify access to capital for the vibrant Indian startup ecosystem.
The Budget, in a comprehensive sense, reflects the way forward for Modi 2.0.