Overall the Budget 2020 has tried to factor in the current economic situation and consumer sentiment. It has taken into cognizance the aspirations of the youth and women, both of whom play significant roles in the economic matrix. Rural and agricultural context, education, healthcare, women, and children feature predominantly; with allocations for the betterment of SC/ST who have long been the marginalized populace within the social fabric.
It has been a hard year for the Indian economy. At this point, it needed government impetus to give it the much-needed shot in the arm. The GDP for 2021 is pegged at 10 per cent. This is a cautious Budget with government expenditure marginally escalated to around 12 to 13 per cent more than last year. The fiscal deficit for 2020 is encouraging, standing at 3.8 per cent of the GDP; and 3.5 per cent for 2021. Net market borrowings stand at Rs 4.99 lakh crores for 2020 with net market receipts figuring at Rs19.32 lakh crores.
There is no remarkable mechanism for increasing liquidity in the current scenario. The cynosure of all industry attention, GST and the rationalization of the existing complex structure, was mentioned only in passing. However, the government has promised to review and implement a simplified GST from April 2020, so we will have to wait and watch. The noteworthy announcement for financial consolidation is the divestment of the IDBI bank through retail investors and LIC via the IPO route.
Though the Budget offers no direct benefit for the automobile sector, but this year’s allocation for transport infrastructure is Rs 1.7 lakh crores , which is an 8 per cent increase in comparison to last year. This is in keeping with the commitment to develop 9,000 kilometres of economic corridor and 2,000 kilometres of strategic highway linkages. Needless to mention, this will be crucial in establishing linkages with remote rural corners of the nation. Commercialized auctioning of 12 lots of public roads in bundles of 6,000 kilometres under the toll-operate-transfer model will enable fund-raising to operate the same.
Transport infrastructure will usher in indirect transformative changes for next-gen passenger and freight mobility. In fact, there was the announcement of a National Logistics Policy which is in the offing. The intention is to ease the cross-country transportation of goods and implementation of a seamless single window market. Evidently, a measure that will see lowering of logistics costs and induce stimulus for development in the logistics sector.
Indirectly, it will provide impetus for manufacturers of farm equipment and OHV like construction equipment manufacturers. However, the 10 per cent raise of customs duties on electrical automotive parts will directly affect the e-mobility vision to transform urban mobility.
Steering Our Skills
Skilled talent is a country’s asset. The Rs 99,300 crore allocation for education is a heartening 4.7 per cent increase compared to last year. The Rs 3,000 crore for skill development is a positive step. This, in conjunction with the proposal to provide internship opportunities for young engineers in local bodies, will facilitate constructive utilization of our young talent pool. Research and development is a spur for innovation. Therefore, harnessing the creative minds of the youth is imperative for seeding forward-thinking hotbeds of disruptive technology that will eventually back growth.
The important highlights are definitely the tax reforms on the personal income tax and company dividend distribution tax that slightly eases the pressure on the common man, and to some extent, corporates. More disposable income in the hands of the middle and lower-income group will definitely stir consumption, so we can hope for an upward movement on the graph.
As is apparent, India is yet to recover from an economic slowdown. Keeping that in mind, it is a safe budget presented by the government.
[Sunjay Kapur, Chairman, Sona Comstar & Vice-President, ACMA]