Union budget paves way for sustainable and inclusive growth

The Union budget has a long-term view for the growth of the economy and lays down a clear path of anchoring India’s growth in an uncertain global economic scenario.

It has a number of medium- to long-term measures that are bound to boost the overall industry and investor sentiment. The continued commitment to improve ease of doing business in India along with fostering a conducive environment for research and development is a very positive outcome of the budget. There are a number of well-defined measures for energising key sectors and bringing more and more people into the mainstream economy.

The vitality brought in by venture-funded start-ups has contributed to the positive outlook for the country. Government’s further support to broad-base the start-up phenomenon by focusing on the hitherto disadvantaged groups under the ‘Stand Up India’ initiative is a great beginning.

There is also ample recognition in the government that India has the potential to bring the next wave of technology-led innovation, reflected in the relaxation of taxes on income from patents and channelizing of funds towards building world-class higher education institutions. This builds on the earlier 80% discount on patent applications fees announced at the launch of Start-Up India.

Further, sustained activity towards 100% rural electrification and additional funds to the Pradhan Mantri Sadak Yojana in addition to investment in a new ‘Digital Literacy Mission Scheme for rural India’ to cover around 60 million additional households within the next three years has the potential to correct regional imbalances that have long existed in India.

It has been observed that the gross domestic product (GDP) of a developing country goes up by 1.38% for every 10% increase in Internet penetration. This increase in GDP is fuelled by growth in trade of goods and services across the country. Already, the government has laid down optical fibre cable in 32,049 gram panchayats (till November 2015). With further investment towards digitisation, we will witness the next wave of Indians coming online and leveraging the Internet to access goods and services that they aspired for but did not have access to before.

The increase in investment in rail and road connectivity to the tune of ₹ 2.18 trillion and plan to revive over 150 defunct air strips with emphasis on time-bound completion is much welcome, especially for the physical and digital commerce industry as India needs world-class distribution infrastructure. More than 60% of our demand already comes from Tier-2 cities and beyond and this number is expected to go up as Internet penetration increases further. Currently, online retail forms less than 2% of the total retail consumption in the country. This share is expected to go up to 10% over the next 7-8 years. India needs world-class distribution infrastructure to keep pace with rapidly growing industry. We need to start now to build capacity to handle volumes of 2020.

Another cornerstone for building a robust economy is the large outlay of ₹ 1.8 trillion through the Micro Units Development and Refinance Agency (Mudra) for Micro, Small and Medium Enterprises (MSME) funding. As an online marketplace with hundreds of thousands of sellers across the country, we have seen challenges faced by SME sector when it comes to credit availability. Given the right support, the sector has huge potential for helping address structural problems like unemployment and unequal distribution of national income across the country.

We are confident that the various budgetary measures will help the country continue on the path of innovation led, sustainable and inclusive growth.

Rohit Bansal, co-founder, Snapdeal