India’s Union Budget for 2024, presented by Finance Minister Nirmala Sitharaman, brings significant optimism for startups and micro, small, and medium enterprises (MSMEs), particularly through enhanced support mechanisms like the Mudra loan scheme. The budget introduces various measures aimed at fostering innovation, supporting entrepreneurship, and ensuring inclusive economic growth.
Boosting Startups
One of the pivotal highlights of the 2024 budget is the substantial focus on the startup ecosystem. Recognizing the critical role of startups in driving innovation and economic growth, the government has proposed several initiatives to support budding entrepreneurs:
- Tax Benefits: The budget extends the tax holiday for startups by an additional year, now available until March 31, 2025. This extension is designed to provide financial relief and encourage more individuals to embark on entrepreneurial ventures.
- Funding and Loans: A significant allocation of ₹1 trillion has been announced, coupled with a 50-year interest-free loan provision. This monumental funding is intended to scale up the startup industry, fostering growth and nurturing entrepreneurship. This long-term financing approach is expected to facilitate research and innovation, which are crucial for the startup ecosystem’s evolution.
- Simplification of Taxation: The government aims to simplify the taxation framework for startups, including rationalizing the angel tax. This simplification is anticipated to enhance the availability of funds domestically, a critical factor for early-stage funding. Simplified tax treatment of Employee Stock Ownership Plans (ESOPs) is another welcome move, as it will attract and retain top talent in startups.
- Focus on Technology and EVs: The emphasis on new-age technology, data, and the electric vehicle (EV) ecosystem stands out. Initiatives aimed at accelerating EV adoption, supporting research, and expanding the public charging infrastructure will not only generate significant employment opportunities but also foster innovation in the EV sector.
The Impact of Mudra Loans
The Pradhan Mantri Mudra Yojana (PMMY), introduced in 2015, has been a cornerstone in supporting small and micro-enterprises. The 2024 budget proposes further enhancements to this scheme to bolster its impact:
- Increased Loan Limits: The government is considering increasing the loan limit under the Mudra scheme from ₹10 lakh to ₹20 lakh. This increase will provide MSMEs with greater access to necessary financial resources, enabling them to thrive and contribute significantly to the economy
- Focus on Women Entrepreneurs: A notable achievement highlighted in the budget is the disbursement of 30 crore loans to women entrepreneurs under the Mudra scheme. This move has significantly advanced women’s empowerment through entrepreneurship, improving their quality of life and preserving their dignity. The financial independence gained through these loans is crucial for inclusive growth across various sectors .
- Expansion and Inclusivity: The extension of benefits under Mudra loans to a broader segment, including non-corporate and non-farm enterprises, ensures that more small businesses can access credit. This inclusivity is essential for the growth of a diverse economic base and supports the vision of a “Viksit Bharat” by 2047.
Additional Measures
The budget also proposes several measures to support other critical sectors, which indirectly benefit startups and MSMEs:
- Healthcare and Education: Expansion of healthcare coverage under Ayushman Bharat to include in-home care needs of elderly patients, and increased enrollment of women in higher education, particularly in STEM fields. These initiatives not only improve the quality of life but also ensure a skilled workforce for the future .
- Research and Development: Increased budget allocation for research and development in sectors like pharmaceuticals and technology. This funding will bolster local manufacturing and innovation, providing startups with the support needed to compete globally
- Infrastructure Development: A significant focus on infrastructure development, including EV charging infrastructure and public healthcare, is expected to create numerous business opportunities for startups. Improved infrastructure will also attract investors, facilitating the growth of new ventures
Conclusion
The 2024 budget presents a comprehensive plan to support startups and MSMEs, with a particular focus on innovation, financial inclusion, and women’s empowerment. The enhancements to the Mudra loan scheme, combined with various other initiatives, are set to create a conducive environment for entrepreneurship and economic growth. These measures reflect the government’s commitment to fostering a dynamic and inclusive economy, ensuring that startups and small businesses can thrive and contribute significantly to India’s growth trajectory.
