The Union Budget 2024-25 has been hailed as a transformative step towards India’s economic growth and development. Haigreve Khaitan, Senior Partner at Khaitan & Co, added his views on the budget’s impact on startups, employment, and energy transition, as well as the initial market reactions.
Abolition of angel tax
One of the most notable changes in the budget is the abolition of the angel tax for all investor classes. This move is being seen as a gamechanger for the startup ecosystem in India. The angel tax, which was initially introduced to curb money laundering, had inadvertently become a major hurdle for startups seeking funding. By abolishing this tax, the government has removed a significant barrier, thus encouraging both domestic and international investors to invest in Indian startups.
Haigreve Khaitan remarked, “The abolition of angel tax for all investor classes is a gamechanger for startups looking to meet their funding needs.” This policy change is expected to provide a much-needed boost to the startup sector, enabling young and innovative companies to secure the capital they need to grow and scale their businesses. This, in turn, will drive innovation, job creation, and economic growth.
The budget also places a strong emphasis on addressing the issue of unemployment, particularly among the youth. The announcement of focused schemes to boost employment and skilling for over 4 crore young Indians is a critical step towards tackling this pressing issue. The direct benefit transfer scheme for those entering the workforce is another significant measure aimed at providing financial support and incentives to young job seekers.
Khaitan highlighted, “The announcement of focused schemes to boost employment and skilling for over 4 crore young Indians, along with the direct benefit transfer scheme for those entering the workforce are necessary steps to tackle the rising concerns of unemployment in the country.”
Energy transition
Another significant aspect of the budget is the government’s continued commitment to energy transition and clean energy goals. The announcement of specific energy transition strategies and roadmaps across industries sends a clear message that the government is serious about its clean energy ambitions. This move is expected to facilitate the adoption of renewable energy sources, reduce carbon emissions, and promote sustainability.
“Specific energy transition strategies and roadmaps across industries is another welcome step, sending a clear message that the government is reiterating its commitment to its ambitious clean energy goals,” Khaitan noted.
Market reactions
In addition to these transformative measures, the budget has also provided some relief to taxpayers, which is expected to boost consumer confidence and spending.
However, the initial market reaction was somewhat dampened due to the increase in capital gains tax. Despite this, Khaitan emphasised the positive aspects of the budget, stating: “While the initial market reaction was a bit of a dampener in light of the capital gains tax increase, there are several positive indicators one can take away when looking at the bigger picture.”
The overall sentiment is that the budget is growth-oriented, with a focus on fostering economic development, job creation, and sustainable practices. The abolition of the angel tax, the employment and skilling initiatives, and the commitment to energy transition are seen as key steps towards achieving these goals.
