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Union Budget effect on Start-ups and EdTech this 2017

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Key takeaways for startup’s and education in the Budget

Text: Abdul Ghafoor    Illustration: Jithin Mohan

Sage Ved Vyas said in Mahabharata: “Tax be such that it does not prove to be a burden on the subject; a King should be like bees collecting honey without causing harm to the tree.” Budget 2017 presented in the background of the demonetization move and assembly elections stayed true to government’s long term policies however steered clear of any disruptive reforms that may have spurred growth spurts. Being a tech enthusiast and a startup founder. I am analyzing the budget from pet areas of mine: Startup and Education. India is home to growing number of startups creating a Silicon Valley kind of buzz with posters of Elon Musk, Steve Jobs and Bansal’s replacing SRK and Katrina in many dwellings.Startup India has been a key focus for this government with a number of sops being announced in the budget, however there needs to be a clear definition on who would qualify as a startup. My Chartered Accountant was asked by a client of his in the construction business whether they would qualify as startup or would the hyper funded JIO be classified as startup ? The current criteria are a bit vague and more clarity on criteria and process to avail this would be good.I have provided an infographic on some key takeaways for startup’s in Budget 2017.

Improving connectivity is another important area that the budget has addressed. Internetconnectivity in rural areas is crucial for Government’s vision of cash less India following the demonetization exercise. Government’s rural connectivity programme Bharat Net got an allocation of Rs.10,000 crores for connecting approximately 3 lac villages. This has a potential to unlock an avalanche of growth in Fintech, e-Health, e-Marketplaces and Ed-tech.

Borrowing from George W. Bush here, “It is clearly a budget, it has numbers in them”. Let us look at some numbers in the Education space. (Skip to Infographic when eyes glaze over) The education outlay increases 9.9% to Rs.79,685.95 crore,of the total outlay, Rs46,356.25 is for the school sector and the rest for higher education. While the increase is good news, I believe it is not adequate allocation, as it is below the desired 6 percent of GDP and below the BJP manifest figures. Ideally, an8 to 10 % GDP outlay would signal intention of being a nation keen in building its human capital.

The Budget has also not fully appreciated the tectonic shift in education enabled by technology and connectivity. Government institutionscannot accommodate needs all students and therefore these students head to private ones. Fees are high at these institions and are not affordable to all. E-learning portfolio such as Swayam Programhas been allocated a total of Rs.497 Crore in 2017-18, this allocation is below expectations and cant be expected to have significant effect. The massive open online courses (MOOCs), part of the overall e-learning segment has been allocated Rs75 crore. This is woefully inadequate especially when the private sector is betting big on Khan Academy and Byju’s among others. In teacher skill enhancement too, budget has increased Rs 1,300 crores for the National Education Mission which comprise of the SSA, the Rashtriya Madhayamik Shiksha Abhiyan (RMSA). This is an essential component for achieving quality educationeducation.

Conclusion

Abdul Ghafoor is a technology & a bootstrap enthusiast with startups in education, engineering services and healthcare. He is presently launching a learning platform that makes knowledge fun grazpp. com. Prior to this, he was with the Infrastructure Advisory at Ernst and Young Middle East and has advised on many the iconic projects in the region.

While the budget has addressed all major areas there is a feel that it is a little less than expected and that the funds allocated are not enough for significant change. I have listed down a personal wish list of what I would like to see in the education space.