The last year had been a rude shock to everyone in the country, particularly for those who run small businesses and startups or work in the unorganised sector. As part of the Union Budget for 2021-22, Finance Minister Nirmala Sitharaman announced several measures to improve the business and operating environment for small companies and startups.
Sitharaman also announced that the government would bring gig economy workers under the proposed labour code. “For first time globally, social security benefits will be extended to gig and platform workers. Minimum wages will apply to categories of workers. And they will all be covered by state insurance corporations,” she said
Investment and regulatory incentives
- Production Linked Incentives: Government has earmarked Rs 1.97 lakh crore towards incentives to boost manufacturing in 13 sectors.
- Textiles: 7 mega investment textile parks will be established over 3 years.
- Fintech: Develop a fintech hub at the International Financial Services Centre in Gift City, Gujarat.
- Insurance: Increase the foreign direct investment limit to 74% from 49% in insurance companies.
- Small companies: Revised the definition under Companies Act of 2013, with paid-up capital requirement set at less than Rs 50 lakh and turnover less than Rs 2 crore.
- One-Person-Companies: Allowing incorporation of OPCs without a restriction on paid-up capital and turnover, allowing conversion to any other type of company, reducing residency limit to 120 days from 182 days to set up an OPC and also allow non-resident-Indians to incorporate OPCs.
- StandUp India: To improve credit flow to women and persons belonging to a scheduled caste or tribe, margin money requirement has been reduced from 25% to 15%.
- Digital payments: Around Rs 1,500 crore will go towards an incentive scheme for digital payments.
- Gig workers: Minimum wages will apply to all categories of workers, including gig economy workers and they will be covered by the Employees State Insurance Corporation.
New opportunities for participation
- MCA database: Upgrading Ministry of Corporate Affairs database with data analytics, artificial intelligence and machine learning this year.
- Worker portal: An online portal will be created for the unorganised labour force, housing information on gig workers, building or construction workers and others. The database will be used for formulate social schemes for migrant workers.
- Amending Apprenticeship Act: Over Rs 3,000 crore has been allocated for the National Apprenticeship Training Scheme to provide post-education apprenticeship, training of graduates.
- Training Programme: Joint effort between India and Japan to transfer Japanese industrial and vocational skills, techniques and knowledge.
- National Research Foundation: An outlay of Rs 50,000 crore has been earmarked for research in national-priority areas.
- National Language Translation Mission: Wealth of governance and policy knowledge to be translated and made available online.
- Deep Ocean: Around Rs 4,000 crore has been set aside for launching a Deep Ocean Mission, over the next five years, which will oversee projects for the conservation of India’s deep sea bio-diversity.
- Digital Census: The census for 2021 will be the first digital census, for which over Rs 3,700 crore has been set aside for 2021-22.
Tax proposals and changes
- Audit Requirement: Requirement to get accounts audited raised for companies with a turnover of Rs 10 crore. Previously, the limit was set at Rs 5 crore
- Foreign Funds: Tax incentives for foreign funds relocating to the IFSC Gift City in Gujarat
- Tax Holiday: Extend the eligibility for claiming tax holiday by one year to March 31, 2022
- Capital Gains: Extend capital gains exemption for investments in startups by one year to March 31, 2022
Fund allocation
- Total budget for MSMEs
- Increased to Rs 15,700 crore in 2021-20 compared to Rs 7,513 crore as per the previous budget estimate for 2021
- Revised estimate of Rs 5,474 crore in 2020-21
- Actual expenditure of Rs 6,697 crore in 2019-20
- Prime Minister Employment Generation Programme
- Budget estimate of Rs 2,000 crore for 2021
- Revised estimate of Rs 1,650 crore in 2020-21
- Actual expenditure of Rs 2,464 crore in 2019-20
- Guarantee Emergency Credit Line facility to eligible MSME borrowers
- Budget estimate of Rs 10,000 crore for 2021
- Promotional Services Institutions and Programme
- Budget estimate of Rs 176 crore for 2021
- Revised estimate of Rs 148 crore in 2020-21
- Actual expenditure of Rs 255 crore in 2019-20
- MSME Fund of Funds
- Budget estimate of Rs 350 crore for 2021
- Revised estimate of Rs 150 crore in 2020-21
- Credit guarantees under Stand-Up India
- Budget estimate of Rs 100 crore for 2021
- Revised estimate of Rs 100 crore in 2020-21
Also read
- PM Modi announces ₹1,000 crore fund for new startups
- Economic Survey compares Government e-Marketplace prices to Amazon, says it has boosted transparency
- Economic Survey 2019-20 Proposes GSTN-Like Body To Run Data Analytics For Public Sector Banks
Budget Speech 2021-22 | All Statements of Budget Estimates 2021-22
***Update (2:26 PM, February 2): Corrected an incomplete sentence in the first paragraph. Originally published at 2:04 PM, February 2.
