Budget 2021 one month to go: what lessons can the UK learn from India?
With a month to go until the Treasury announces the UK’s 2021 budget, all eyes are on Rishi Sunak to see what measures he will take to stimulate the economy after a year’s worth of pandemic restrictions.
Earlier this week, India shared its budget, balancing between supporting growth and aiming to reduce the country’s deficit (from 9.5% of GDP in FY21 to 6.8% of GDP in FY22), and offers a boost to the country’s startup community. The budget was met with wide praise, with measures in place to stimulate the economy without enforcing tax rises on the population.
India’s Finance Minister announced welcome funding for small businesses and startups, with a year long extension to the startup tax holiday in place. £1.6 billion – more than double last year’s figure – was allocated to the Ministry of Micro, Small and Medium Enterprises (MSME). Other measures to be put in place included collateral free loans for businesses, and the launch of a fund of funds for MSMEs.
With SMEs accounting for 99.9% of the business population (6.0 million businesses), and three fifths of the employment, SMEs holding the potential to power a strong recovery to the UK economy, Sunak and the government should work to ensure that UK SMEs are given a similar boost to India’s.
Nayan Gala, founding partner at venture capitalist JPIN VCATS, shares his view on the upcoming budget:
“The UK should take inspiration from India’s budget – big spending across the board, without large raises in taxes. The budget looks like a great step for India, and one that the UK government can learn from. Economic growth will be the cornerstone of the UK’s recovery and growth is something that startups and small businesses excel in, even in the toughest of circumstances.
The UK’s SMEs are the backbone to our economy, and are set to be a key player in the UK’s post-pandemic, post-Brexit recovery. Boosts to small businesses should be a high priority for the Treasury in this year’s budget – it’s crucial that money is set aside for our startups and family businesses.”