Cashback as an incentive by startups to lure and retain customers is nothing new. It is called populism, invented and mastered by governments for decades.

The Union Budget 2019 presented by finance minister Nirmala Sitharaman aims to create a multiplier effect to set the nation on course to achieving the targeted $5 trillion economy by 2024.

Every entrepreneur is counted: The stereotype of an entrepreneur today is that of an engineer and his clique, all clothed in athleisure attire, with a nonchalant attitude and aiming to disrupt an incumbent through cutting-edge technology. Nothing wrong with that, but imagine how this newspaper made it into your home today. There were a series of micro-entrepreneurs who worked in a chain link mechanism to move things around to make the delivery happen.

For disruptors, the resolution of angel tax is a boon. Whether capital was raised from angels or institutional investors, relief in terms of capital gains, valuation and taxation is big. This will make way for more capital infusion and clear ambiguity retrospectively for startups that have raised millions of rupees in funds.

India has over 63 million unincorporated non-farm MSMEs that employ nearly 50 million people. The infusion of 70,000 crore in PSU banks will make a difference in terms of how micro-entrepreneurs borrow from such banks. The proposed introduction of an e-commerce platform to sell products from MSMEs and the Khadi and Village Industries Commission will create discoverability and worldwide distribution opportunities for regional players. The proposed GI tags and patents for artisans, along with a training programme to upskill 70,000 entrepreneurs, will make way for a cycle of growth and employment.

Incentivize what matters, penalize what hurts: Behaviour change can be brought about by rewarding habits that you want to stick to and penalizing others. This budget has a series of such behaviour altering measures. The proposed 2% TDS for cash withdrawals for business purposes exceeding 1 crore a year is a deterrent for businesses to use cash for transactions, while scrapping of MDR is an incentive to go digital and use less cash.

The 2.5 percentage points import duty increase on gold and other precious metals is a good move, too, for it may encourage consumers to open up their wallets to other forms of savings and wealth creation products.

There’s an array of both monetary and non-monetary incentives announced to bring about behaviour change. GST returns for companies less that 5 crore turnover per year is now quarterly. This will increase adherence. Using Aadhaar in lieu of PAN filing tax returns is another incentive to bring more people into the tax paying pool.

The making of the next Silicon Valley and Detroit: Digitalization of everything is inevitable. The proposed tax exemption for mega manufacturers of silicon chips, solar components, and computer servers will attract global and Indian companies to manufacture locally, something that happened in the south of San Francisco 50 years ago, leading to its emergence as a computing superpower, by giving rise to companies like HP, Intel, Apple and Cisco. Governments despise surveillance, unless it is done by them. So, incentivizing manufacture of critical IT components indigenously will yield benefits, including strengthening of national cyber security over several decades.

Sreeraman Thiagarajan is co-founder of Agrahyah Technologies, a maker of voice, audio, and vernacular products.

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