1. Budget 2016: A well-meaning and sharply-focused Budget

Budget 2016: A well-meaning and sharply-focused Budget

Often CEOs and CFOs of listed companies struggle to decipher fluctuations in their stocks. Having been there, the course that often works is stick to being focused...

By: | Updated: March 1, 2016 1:37 PM

Often CEOs and CFOs of listed companies struggle to decipher fluctuations in their stocks. Having been there, the course that often works is stick to being focused, make choices and do what’s right for your business. In the midst of a global overhang mired by growth slowdown and bearish markets, our country’s CEO and CFO have crafted a Budget that spells prioritisation, being focused and doing right things for the country strategically. They have reconfirmed their stated objectives rather than trying to reset them, thus reassuring that the Budget is not an event, but a journey.

Prioritisation is clear, with a focus on farm, social, infrastructure and banks. India is considered to be a huge market, where a big potential wealth lies at the bottom of the pyramid. The government needs no convincing it has to unleash this potential by cutting back on unproductive distribution of expenses and augmenting incomes of rural Indians.

Every Budget since Independence talks about rural impetus, but urban-rural disparities have only increased. It could be also because the quantification of output was lacking. For the first time I heard any finance minister say that he intends doubling the income of farmers by 2020, making his statement of purpose more convincing. More farmland under irrigation, new irrigation fund under NABARD, enhanced farm credit, rural health protection, rural infrastructure both physical and virtual (common e-market for farmers), and 100% FDI for food products made in India have the potential to enhance rural development, disposable income and demand. This reshapes the strategy and opportunity for segments across industries and can serve as a multiplier on India’s attractiveness for global investors.

India is a capital-starved market and despite muted expectations from this Budget, experts had not minced words on their expectations of a simplified tax code, bank NPAs, future of long-term capital gains, sustainable tax-to-GDP ratio, rationalisation of subsidies, fiscal deficit etc. The minister seemed very focused while delivering the speech. His resolve to hold onto the existing fiscal deficit forecast, downward revision of revenue deficit target, and articulation of nine pillars based on which the Budget has been built instils confidence. Infrastructure outlay of Rs 2.21 lakh crore, Rs 25,000 crore for recapitalisation of PSU banks (more if required) and a roadmap for their consolidation, and outlay and schemes for education, skill development and job creation especially entrepreneurship remind me of a cola ad tagline “Yehi hai right choice, baby!”

Rich being taxed more on account of cars, luxury goods, dividend tax and surcharge, and lower income groups given some relief on house rent deductions and housing interest sops is palatable for even taxed individuals. While corporate tax rates didn’t go down, it may mean the targeted reduction to 25% will either be back-ended or may get rationalised through a redefined interpretation. Cheer on tax reforms is due on account of no retro tax, commitment to GAAR from April 1, 2017, clarity on penalties, process to expedite IT cases, abolishment of 13 different cesses etc.
The real success of this Budget lies in its impeccable implementation. We must wish all stakeholders great success, so that this Budget is not relegated to an excellent Budget for an Aadhaar-card holding non-smoker who lost his degree certificate and plans to launch a loss-making start-up this year!

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