The Union Budget 2020-21 presented by Finance Minister Nirmala Sitharaman comes at a time when the Indian economy is facing considerable challenges from a growth slowdown. Rising to the challenge, an inclusive and a holistic budget was presented, keeping in mind all sections of the economy, which included comprehensive measures for reviving demand and boosting growth.
Rightly centered around the three themes of an ‘Aspirational India’, ‘Economic Development’ and a ‘Caring Society’, this year’s budget saw several measures, targeted at raising the purchasing power of the citizens, boosting farm and infrastructure sectors, promoting ease of living, job creation and encouraging innovative businesses, among others, which will go a long way in bolstering all-round economic development and furthering aspirations of the youth.
In perhaps one of the boldest moves and a big relief to investors, this years’ budget saw the abolition of the Dividend Distribution Tax (DDT) and proposed the reintroduction of the classical system, wherein companies would no longer be required to pay DDT and dividend will only be taxed at the hands of the recipients.
This has been a long-standing request by the Confederation of Indian Industry (CII), and the industry greatly appreciates this move that would significantly enhance investments and make Indian equity markets more attractive.
To build trust and eliminate tax harassment, the budget announced that a taxpayer’s charter will be enshrined as a part of the statute. CII is happy to note that the government has considered the negative impact of tax harassment.
This move is expected to promote ease of living through efficiency and fairness in tax administration.
Further, the introduction of faceless appeals in addition to the faceless assessment scheme is also a welcome move and in line with CII recommendations. On personal income-tax, the budget introduced an optional tax regime that introduced new slabs with lower tax rates, but with no exemptions.
Several measures were announced to boost the agriculture sector and farm incomes. The industry is happy that the government is committed to double farmer incomes by 2022, as this will enhance rural demand for goods and services.
The expansion of PM-KUSUM scheme aims to provide 20 lakh farmers with standalone solar pumps and 15 lakh farmers with grid-connected solar pumps.
Other measures such as creating warehousing, cold-storage facilities and setting up of the ‘Kisan Rail’ by the Indian Railways will promote efficient post-harvest handling and logistics for perishables.
Other announcements, specifically encouraging states to adopt model laws on land leasing, agricultural produce and livestock marketing, are also welcome moves.
The budget unveiled a roadmap for boosting infrastructure, which remains a top priority of the government.
The allocation of Rs 22,000 crore for supporting the National Infrastructure Pipeline, accelerated development of highways, setting up of 100 more airports and a soon-to-be-released National Logistics Policy creating a single-window e-logistics market, are all steps that would provide a major thrust to infrastructure and job creation.
Health and education sectors also got a much-needed boost from Budget 2020. The government’s decision to provide viability gap funding to augment healthcare in tier 2 and tier 3 cities is a welcome move. The proposal to allow educational institutions to access External Commercial Borrowings and Foreign Direct Investment is a positive step towards attracting greater finance and promoting quality higher education.
Several other measures that encompass affordable housing, greater digitisation, MSMEs, entrepreneurship, clean energy, among others, are in the right direction. This year’s budget has been an ambitious and inclusive one, which is focused on reviving growth.
Note: This article was first published on The Indian Express, 3 February 2020.