Budget 2020: Short Recital of the Longest Budget Speech
There were many expectations from the Union Budget of India 2020-21, especially in the light of the country’s economic growth, which is slowest in more than six years, dropping to 4.5% in the July-September quarter 2019-20, according to official data.
Thus, when the Budget 2020-21 was recited over 2 hours 43 minutes and 13,128 words, the nation had expectations. Though, there was one that no one had imagined, of creating the record for delivering the longest budget speech by Union Finance Minister Nirmala Sitharaman; there were a few other highlights too. The focus on creating better health, education, job creation, expansion of the national gas grid, and the development of one hundred more airports, the tax charter’s announcement were all positives that got a thumbs up from aspirational India.
However, there were a few disappointments with the positives, especially the lack of a significant incentive to put money directly in the people’s hands to trigger consumption. Union Budget 20-21 has no direct benefit for the real estate sector, no modification to the long-term capital gains tax, dividend becoming taxable in the hands of investors, and reducing the subsidy on food, fertilizers, and petroleum were some evident thumbs down for the Modi government’s budget this year.
Speaking to the SpeakIn experts across policy, politics, and business, here is a look at what some of these opinion-makers from the Indian Inc. had to say about Budget 2020:
Sanjaya Baru, Economist and Policy Analyst says, “Nirmala Sitharaman’s budget strategy for 2020-21 presses all the right buttons, but a poorly drafted, excessively long speech makes one miss the woods for the trees. With optimistic projections on disinvestment and sleight of hand on direct taxes, seemingly liberal but not so, the finance minister has promised to keep the fiscal deficit at 3.8% of GDP. While the finance minister has done much to encourage investment and promote consumption, the inability and lack of business leadership to articulate budgetary policy within a wider and credible macroeconomic strategy have contributed to an unenthusiastic response from the markets and economic commentators.”
Kamal Agarwala, Founder and CEO, La Exactlly Software, shares a business perspective, “I see this as a very forward-looking, development-oriented budget. There are many key steps, such as allowing 100% profit deduction for three years out of 10 years for startups with turnover up to INR 100 crore. Also, ESOPS are not taxable for five years or until they sell or leave great news for startups. Focus on enhanced digital connectivity, emerging tech, data center parks, quantum computing, and most importantly, IPR creation in India will set up a strong foundation for the digital economy. Simplified Procurement through GEMS and digital refund of taxes can enhance ease of doing business for SMEs. Lastly, the reduction in TDS to 2% for technical services will bring more liquidity and working capital to companies’ hands. Especially this will be of great help to SME companies.”
Nakul Beri, an NRI based out of Singapore and leading an international bank shares an outside-in view, “The proposal of the Government to amend NRI status coupled with the intent to tax Indians abroad if they are not paying tax is a dampener. Indians could potentially start investing in their country of residence and not send money back to India for investing as they have done in the past. There have been no out-of-the-box announcements to boost international FDI and take India to a 5 trillion USD economy. There should have been a lot more focus on increasing consumption and gaining more international confidence through radical economic stimulus.”
In essence, the Budget 2020-21, definitely presented some encouraging possibilities in order to revive the economy as it highlighted increased focus and opportunities of investment in areas like infrastructure, healthcare, education, and skill training. Simplification of the income tax regime, reforms in ESOP taxation for the start-up sector and reduction on corporate tax to 22% for businesses were some other promising announcements that Union Finance Minister Nirmala Sitharaman made in her second budget speech. However, from an overall perspective, I would state it as a neutral budget as it left ample room to lay down specific measures and critical reforms in the area of job creation which in the current time is India’s biggest pain point. By leaving the three job-creating sectors – mining, manufacturing and construction, and further reducing the allocation for the rural employment guarantee programme considerably, the budget didn’t address this crucial issue of unemployment.
Deepshikha Kumar, founder at SpeakIn believes, Budget 2020-21 has its ups and downs. Though the immediate stock market reaction, with Nifty crashing over 2.5 per cent, spoke of a dented sentiment, till the fine print is thoroughly read and evaluated, the economy will keep its hopes alive.
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