Budget 2016: Impact on Entrepreneurial Growth presented on July 2016

1. Budget 2016
Impact on Entrepreneurial
Growth

2. Introduction
The Union Budget 2016 has been looked up by
the entire start-up community as the most
interesting one, which for the first time has
been prepared with a vision of self-propelling
the entrepreneurial population.

3. Key announcements for Start-ups in
Budget
• Start-ups which will be set up during April,2016 to March,
2019 will receive 100% deduction of profits for 3 out of 5
years (MAT will apply in such cases).
• The government has set up a fund with corpus of INR
10,000 crore to provide support to Start-ups.
• Women Entrepreneurs would be entitled to a loan from
INR 10 lakhs to INR 1 crore to start a business.
• Creating online portal for easy registration so as to do away
with regulatory processes.
• Amendments will be made to the Companies Act, 2013 for
empowering environment conducive for start-ups
• Two projects per bank branch to be facilitated which will
benefit at least 2.5 lakhs entrepreneurs.

4. Union Budget 2016
The Union Budget 2016 aims to accelerate the
investors’ interest and make Start-ups more
competitive, by inducing initiatives like
creating a fast track system for examining of
patents in a cost effective manner, exemption
of income tax for the first three years as well
as tax exemptions on high investments. There
will be no Capital Gains Tax, which will reduce
administrative and legal costs.

5. Objectives
• To identify the factors highlighted in a budget
which will lead to entrepreneurial growth
• To study the impact of start-up provisions on
entrepreneurial growth

6. Methodology
Research Design:
• The paradigm of the study is from the economists perspective
• The Ontology stance of the study has taken Interpretive Approach
• This is qualitative study by using secondary documents.
• The secondary data is collected from various reports, journals,
research papers and books
Data Collection:
• The data is collected from the secondary sources derived from;
journal publications, books, e-library, report of KPMG, report of
Dun and Brad street, report of ICAI, Analysis done by different
economists were also used to find the gaps in the study.

7. Analysis

8. 1. Ease of doing business

9. 1. Ease of doing business
• India is the South Asian economy recording the biggest increase in
the distance to frontier score since 2004.
• One of the areas of greatest improvement has been starting a
business.
• In 2004 India cut time from the process for obtaining a permanent
account number (an identification number for firms), and in 2006 it
speeded up the process for obtaining a tax registration number.
• In 2010 India established an online system for value added tax
registration and replaced the physical stamp previously required
with an online version.
• In the past year India eliminated the paid-in minimum capital
requirement and streamlined the process for starting a business.
• More reforms are ongoing—in starting a business and other areas
measured by Doing Business—though the full effects have yet to be
felt.

10. 1. Ease of doing business
• In 2014 the government of India launched an
ambitious program of regulatory reform
aimed at making it easier to do business.
• Spanning a range of areas measured by Doing
Business, the program represents a great deal
of effort to create a more business friendly
environment, particularly in Delhi and
Mumbai

11. 2. Taxation
• Start-ups which will be set up during April, 2016 to
March, 2019 will receive 100% deduction of profits for
3 out of 5 years (MAT will apply in such cases) .
• This will encourage many entrepreneurs to enter into
the business and achieve their break-even point at the
earliest possible due to lesser tax liability and
ploughing back their profits in business.
• Resultant the business will grow faster motivating
entrepreneurs to take up initiatives and expand their
businesses too.

12. 3. Access to Capital for MSMEs
• Apart from the MUDRA loans budget also had
made a provision for easy access to capital by
government setting up a fund with corpus of INR
10,000 crore to provide support to Start-ups.
• To promote entrepreneurship among women
provision is made where women entrepreneurs
will be entitled to a loan from INR 10 lakhs to INR
1 crore to start a business.
• Further two projects per bank branch to be
facilitated which will benefit at least 2.5 lakhs
entrepreneurs.

13. 4. Skill Development
• Entrepreneurship Education and Training
through Open Online Courses to be provided
in 2,200 colleges, 300 schools, 500
government ITIs, and 50 Vocational Training
Centers.
• This will lead to promoting entrepreneurship
education and skill development for posterity
to venture into entrepreneurship.

14. Present Scenario
FACTOR CURRENT SCENARIO
Ease of Doing
Business
India has moved to Rank of 130 in 2016 fro 134 in 2015 as per
World Bank as against 142 in 2014
Taxation for
Start-ups
As per Economic survey India as on Jan 2016 there were 19,400
technology-enabled Start-ups in India which can get benefit of
100% tax exemption for 3 years on profit out of 5 years.
Access of Capital
for MSMEs
In 2015-16 there were 1,24,74,668 new accounts of entrepreneurs
were opened under MUDRA scheme and total amount sanctioned
was approximately 82,184 crore.
Skill
Development
In July 2016 the Union cabinet approved Rs 12,000 crore for the
second phase of the Pradhan Mantri Kaushal Vikas Yojana
or PMKVY to impart skills to 10 million people over the next four
years. It has also attached a quarterly review system for skill
centers to fix accountability.

15. Conclusion
Budget 2016 focuses on pro-market initiatives
will have a cascading effect with youngsters
from becoming job-creators rather than job
seekers. Necessary amendments will be
introduced in Companies Act facilitating
registration of companies in one day and also
addressing other challenges in doing business
in India, including for start-ups. This will lead
to a cumulative effect in entrepreneurial
development.

16. THANK YOU
Ketan Vira. Research Scholar , JJTU
Dr.R.K.Singh. Director, GNVSIOM