The Indian Budget is out and am worried! Not because, the bold brush effort of the Finance Minister to put more money in the consumers pockets, would lead to higher consumption, and hopefully, drive up demand. Not because, the easy credit to keep more money in circulation during the recession ( hopefully, that’s past!), is still in place.
I am worried because this budget and all the past ones of the post-liberalised era have done little or nothing for promoting entrepreneurship. Strange, but true! even though, most of the earning population in this country is “self-employed”, the effort to set up a consolidated approach to promote and grow the mom-n-pop stores is sorely missing.
So what does the FM have anything to do with it? at last count, there were at least 3 other ministries, directly and scores of others indirectly involved in promoting the cause of the STARTUP.
Here’s a thought! Only a thought, because everyone has an idea in India, which quickly becomes an option from poor or no execution. HOW About a TAX fund? You read that right! not a tax break, or a waiver, but a fund. here’s what it is.
The first assumption: all entrepreneurs want to create wealth.
The first reality: the first claim of all earnings direct and indirect belong to the government, even though it is a uniformly diminishing proportion.
The second assumption: Startups are willing and interested in paying tax, if that will give it leverage.
The second reality: Startups need investors, employees, customers and strategic partners, but most importantly, working capital. If the amount of tax paid gets them leverage to get what they need, they would be happy to lend a shoulder.
How would it work? How about crediting the tax deducted at source, and paid through the year going into a TAX fund? it’s like a bank deposit, which is with the government, and which can be collateral for borrowings.
The TAX man could also charge a financing fee for this collateral, and also earn from allied services. For instance, I know a bunch of companies, who’d love to target the top 1 million tax payers in the country. similarly, there would be a whole bunch of other service providers who would be delighted to offer a range of services to various sections of tax payers.
What this would do is add a much needed financial multiplier which would provide the leverage, not just in terms of working capital funding, but also in engaging with other key stakeholders.
Now contrast our lack of imagination with the country which was built through free enterprise. In the US, fierce lobbying is in process for the STARTUP VISA to allow entrepreneurs from abroad to start work on the basis of an idea. Looks like the economic recession hasn’t created a dried off their creative energies to come back into global reckoning, this time with global entrepreneurs fuelling the surge.