<b>Ananth Narayanan:</b> A big leap towards digital India

Budget 2017 is focused on bringing growth back to the economy after demonetisation. While there is no specific focus on the e-commerce sector, the overall thrust on a digital economy will enable the industry to flourish.  The measures to boost consumer spending in the long term such as tax exempted income limit increased to  Rs 3 lakh and no increase in service tax are a welcome move for the e-commerce industry.
 
There are a few specific takeaways which can be spotted in the Budget for the start-up ecosystem, which is largely in the digital domain. For example, start-ups can now carry forward their losses for three years, even if the promoter holding goes below 51 per cent. There is in his speech an underlying theme of digitisation, transparency, cashless transactions and more money in the hands of people in the salaried class that should lead to a more energetic e-commerce space.

 
The big challenge for the digital space had always been that fiscal India was in the non-formal, non-accounted space. Even large e-commerce verticals such as our own, of fashion, accounted for single-digit share of the market  and a lot of the reason was the ability of the cash economy to move seamlessly in the offline space. As the combination of digital expansion, government backing for cashless transactions and the big stick of accountability come together, we will see, over time, the impact on e-commerce and digital volumes.
 

From the same big- picture point of view, there are elements in the Budget — and there are developments outside that point towards a very interesting year ahead.

 
For one, the principle of improving the ease of doing business in India has taken a significant jump with abolition of the Foreign Investment Promotion Board. This will lead to an increase in the flow of FDI in the country.  The global backdrop, on the other hand, indicates that India might well benefit from a reverse flow of talent of returning Indians, as the US begins tightening its visa norms. We might even see an increase in investments in the Indian technology and e-commerce space going up as the cost of doing business goes up in the US. In a sense, that also points to a bit of a missed opportunity to provide the Indian e-commerce sector a bit of a leg-up to take advantage of changing global contexts.

 
More money in the hands of people and a special focus on the rural sector invariably results in a groundswell of positive consumer sentiment. That tends to have a more robust resonance in the e-commerce space and people continue to look for good brand experiences but with better value.
 
Digital infrastructure has also got a boost post-demonetisation, and the government should introduce measures to further strengthen this trend. Since a growing number of payment transactions are digital, any move to promote these will directly impact the e-commerce sector. Some of the Budget announcements in this direction include cash transaction limit up to  Rs 3 lakh, measures to be announced to promote digital payments at petrol pumps, hospitals, launch of schemes to promote BHIM and Aadhaar-enabled payments, boost to digital infrastructure with more than 150,000 gram panchayats getting high speed broadband internet access and the setting up of one million new PoS terminals.

 
Overall, the Budget has been positive and has all the elements to drive a more sustainable digital transformation. In times to come, these should lead to greater focus on the needs of the digital-based enterprises, particularly e-commerce enterprises, which are driving growth in virtually every sector of the economy.
  The writer is CEO, Myntra