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What all the government implemented in the digital ecosystem from the 2018-19 Indian Budget

By Trisha Jalan and Sneha Johari

Earlier today, the finance Minister announced India’s Interim Union Budget for 2019-2020 while touching on several aspects of technology, finance, startups etc. We combed through the Implementation of Budget 2018-19 (pdf) to highlight the government’s execution with projects in technology and the digital ecosystem in India.

Here are the highlights:

Digitisation

  • Expansion of coverage of e-NAM Network: All the 585 Markets have been integrated with e-NAM portal by March 2018
  • Digital intensity in Education: A committee has been set up by Department of Higher Education to ways to support “Operation Digital Board” and a DIKSHA portal has been launched.
  • National Logistics Portal as a single window online marketplace:
    • A Proof of Concept for the National Logistics Portal has already been prepared and has been approved by the Committee of Secretaries.
    • The Detailed Project Report (DPR) has also been prepared. The RFP for selecting a Managed Service Provider (MSP) is ready.
    • Target for on boarding the MSP and for launch of NLP are set for 7th March and 15th August respectively.

Taxation, Finance, Digital Finance and Investments

  • Policy for Hybrid Instruments: A draft policy for Hybrid & Innovative Instruments is under circulation to relevant Ministries seeking views
  • Incentivizing MSMEs: The government has proposed that corporate tax for businesses with an annual turnover of upto Rs 250 crore in FY16-17 willl now be reduced to 25%, in order to benefit MSMEs. Earlier, this was limited to businesses with turnover of Rs 50 crore. This has been incorporated in the Finance Act 2018.
  • Controlling cash economy: Payments over Rs 10,000 made by trusts/institutions will be disallowed and will become taxable. Additionally, to ensure TDS compliance, 30% of the amount will be taxed in case of non-deduction of tax. Amended into Finance Act, 2018.
  • E-assessment: E-assessment will be rolled out countrywide from the current 102 cities to digitise filing of income tax returns.
  • Changes in Direct Tax: The definition of ‘eligible business’ for a starrtup will be now be in line with the DIPP’s definition. The government proposed that the incorporation date for startups availing benefit under Section 80-IAC will be extended to March 31, 2021, from March 31, 2019.

***

  • Onboard public sector banks and corporates on Trade Electronic Receivable Discounting System (TReDS) platform and link with GSTN:

Status of implementation

  • All Public Sector Banks (PSBs) and 211 large Corporates (including PSUs) have been on-boarded on TReDS Platform.
  • For ensuring various deliverables focused on MSMEs including ease of access to credit and ease of cash flow, an initiative has been taken to provide contactless loans to MSMEs within 59 minutes through a web portal www.psbloansin59minutes.com which was launched 2nd November, 2018.
  • This Portal draws upon information across distributed data points from GSTN, Income Tax, CIBIL scores etc.

***

  • Non-Bank Finance Companies (NBFCs) stepped up financing of MSMEs after demonetization

Status of implementation

  • MUDRA Ltd has reviewed its Refinance Scheme for NBFCs and a memorandum with following relaxations have been approved by its Board:
  1. External rating norm can be relaxed by sanctioning committee in case the NBFC furnishes a guarantee of another NBFC/ Corporate having an external rating of AA and above.
  2. Security with asset coverage of 1.10 times (relaxed from 1.25 times).
  3. Total exposure to NBFCs has been enhanced from 100% to 200% of capital funds of MUDRA.

***

  • Use of fintech in growth of MSMEs

Status of implementation

  • Department of Economic Affairs has constituted a Steering committee on FinTech under the Secretary Economic Affairs to consider issues relating to development of Fintech space in India with a view to make Fintech related regulations more flexible and generate entrepreneurship.
  • The Committee will also focus on how Fintech can be leveraged to enhance financial inclusion of MSMEs. The Committee has finalised its report.

***

  • Regulatory framework for International Financial Service Centre (IFSC): A draft Bill is under preparation in consultation with all the stakeholders.

***

  • The Government does not consider crypto-currencies legal tender or coin and will take all measures to eliminate use of these crypto-assets in financing illegitimate activities or as part of the payment system. The Government will explore use of block chain technology proactively for ushering in digital economy.

Status of implementation

  • In order to promote Block Chain Technology in India, a Distributed inter-institutional Centre for Excellence in Block Chain Technology with premier Academic institutes, Government organisation & R&D institutes is being set up by MeitY through CDAC

Small business and startups

  • Formalised MSMEs database of businesses and finances to improve financing MSMEs’ capital requirement including working capital.

Status of implementation

  • Constituation of a working group to decide policy guidelines on “flow-based lending using GSTN to MSMEs through Fintech Companies”
  • For ensuring credit support, capital and interest subsidy, the Government is clearing all pending liabilities under Credit Guarantee Scheme (CGT-MSE) and Credit Linked Capital Subsidy Scheme (CLCSS).
  • This year Rs 311.00 Crore have been released to the Credit Guarantee Trust for MSEs and  Rs 941.76 Crore have released to the concerned Banks/FIs for clearing the liabilities of the CSCSS.
  • Government is exploring the possibility of data sharing from GSTN for enabling reducing delays in sanction of credit to MSMEs.

***

  • Special developmental and regulatory regime for VC funds and angel investors growth, additional measure for growth of alternative investment funds (AIFs) in India.

Status of implementation

  • Reforming tax and regulatory structure of VC, startups and AIF framework in consultation with IVCA
  • Exemptions in “SEBI’s AIF Regulations, 2012” and encourage AIFs to locate in the International Financial Service Centre during the current financial year in consultation with the Sectoral Regulator as follows:-
    i) SEBI, vide Notification dated 1.6.2018, has increased the maximum investment limit by angel funds in venture capital undertakings to Rs 10 crore from Rs 5 crores.
    ii) SEBI had enhanced the limit of overseas investment by AIFs and Venture Capital Funds to US $1250 from US $500.
    iii) SEBI, in consultation with market participants have issued “Operating Guidelines for Alternative Investment Funds in IFSC’ on 26.11.2018.
    iv) SEBI Board has approved revamping the Institutional Trading Platform as “Innovators Growth Platform”

Transport

  • Redevelopment of 600 major railway stations, wifi, CCTVs.

Status of implementation

  • Redevelopment is proposed to be taken up in phases after completion of studies.
  • Work of Wi-Fi internet facility has so far been completed at 721 stations.
  • CCTV facility has been provided at 436 stations.

***

  • Fastags at tolls: Number of Fastags has gone up from about 60,000 in December, 2016 to more than 10 lakh now. The Government will come out with a policy to introduce toll system on ‘‘pay as you use’’ basis.

Status of implementation

  • Action is being taken for award of Pilot Project to test the feasibility of Global Positioning System (GPS) based tolling on ‘Pay as You Use’ concept.
  • Tolling on the Eastern Peripheral Expressway, which is an access controlled facility with closed tolling system (i.e. tolling on ‘pay as you use’ basis) commenced from 15 June, 2018.

AI, Robotics

  • National program for artificial intelligence, R&D of its applications: Draft discussion paper on the National Strategy for Artificial Intelligence (AI) was issued on 4.06.2018. NITI is now working on implementing this strategy.

***

  • To invest in research, training and skilling in robotics, artificial intelligence, digital manufacturing, big data analysis, quantum communication and internet of things, Department of Science & Technology will launch a Mission on Cyber Physical Systems to support establishment of centres of excellence. Doubled the allocation on Digital India programme to Rs 3073 crore in 2018- 19.

Status of implementation

  • On 06.12.2018, the Government has approved the National Mission on Interdisciplinary Cyber-Physical Systems (NMICPS) at a total outlay of Rs 3660 crore for a period of five years.

Telecom, broadband (NOFN)

  • Bharatnet: Connecting one lakh gram panchayat through high speed optical fiber network has been completed under phase I of the Bharatnet project.
  • This has enabled broadband access to over 20 crore rural Indians in about two lakh fifty thousand villages.
  • The Government also proposes to setup five lakh wi-fi hotspots which will provide broadband access to five crore rural citizens.
  • Provided Rs 10,000 crore in 2018-19 for creation and augmentation of Telecom infrastructure.

Status of implementation

  • As on 02.12.2018, 301,154 km optical fiber cable has been laid.
  • A total of 1,21,652 Gram Panchayats (GPs) have been connected by Optical Fiber Cable (OFC) and 1,16,411 GPs have been made Service Ready.
  • Further as per the modified strategy to implement Bharat Net, the last mile connectivity, through Wi-Fi or any other suitable broadband technology, is to be provided to cover all the GPs (approximately 2.5 lakh) in the country. Rs 17,786 has been disbursed till date.
  • In the Financial year 2018-19, Rs 10,000 crore has been allocated for Universal Service Obligation Fund (USOF). Out of this, Rs 8,175 crore has been allotted for the Bharat Net Project.
  • For implementation of the Phase-II, the Telecom Commission has decided the model for implementation in each state namely State-led model, CPSU–led model, Private Sector model and Connectivity on Satellite media.
  • Telecom Commission on 11.07.2018 has approved a Last Mile Connectivity Model for providing Wi-Fi connectivity to Government institutions. So far, Wi-Fi hotspots have been installed at 39,359 GPs and out of them, services are being provided in 10,775 GPs, catering to more than 11 lakh subscribers.

***

  • 5G and its adoption, 5G Test Bed at IIT, Chennai.

Status of implementation

  • DoT has approved financial grant for the multi-institute collaborative project to set up ‘Indigenous 5G Test Bed’ (building an end to end 5G test Bed) in India at a total cost of  Rs 224 crore over a period of 36 months.
  • The eight collaborating institutes in the project are Centre of Excellence in Wireless Technology, IIT Bombay, IIT Delhi, IIT Hyderabad, IIT Madras, IIT Kanpur, IISc Bangalore and Society for Applied Microwave Electronics Engineering & Research.
  • The first instalment of the project amounting to Rs 35 crore was issued in March, 2018 to the grantee institutes.
  • The ‘Indigenous 5G Bed’ project teams in various locations are focused on creating a first version Test Bed requirement and design finalization at each location. They have also started the design and building of some of the components of the test bed.

Aadhaar for businesses

  • Every enterprise, major or small, also needs a unique ID. The Government will evolve a Scheme to assign every individual enterprise in India a unique ID.

Status of implementation

  • An Inter-Ministerial Technical Group (IMTG) was constituted for developing “Unique Entity Number” for entities like corporations, limited companies, Propriety (sic) Firms, Registered Societies and Trusts etc.
  • As per the recommendation of IMTG, PAN will be considered as UEN for different entities registered with different authorities.

Written By

I cover health, policy issues such as intermediary liability, data governance, internet shutdowns, and more. Hit me up for tips.

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