Budget 2019-20: Overall the budget seems to be highly optimistic but yet the big challenge remains as to how the government will be funding these ambitious goals.
By Sameer Mittal
Union Budget 2019 India: Keeping the target of making India a Rs 5 trillion economy in next five years, the government has certainly presented a very balanced budget to boost both the domestic and foreign investments with special emphasis on infrastructure, environment, affordable housing, development of MSME sector, startups and safe drinking water. However, the increase in surcharge on Individual assesses is surely going to increase the burden on the creamier layer.
Corporate tax of 25% on companies with turnover of up to Rs. 400 crores is a welcome move. The Government has also sought to provide a solution to the stressed NBFC sector by providing for one-time six-month partial credit guarantee to the PSB for the first loss of up to 10%, further the regulation of housing finance companies by Reserve Bank of India instead of National Housing Bank will be providing much of transparency in the sector.
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The government has provided a slew of measure to attract foreign investments by providing easing of KYC norms for FPI’s, providing more investment avenues for them by opening up new sectors including aviation, media etc., merging of non-resident portfolio schemes with FDI route, ease of local sourcing for single brands sector, opening FPI’s to subscribe to listed debt papers of REITs and INVITs and debt papers of NBFC’s will boost the investment sentiment. An additional incentive to the electronic vehicle industry under FAME-II will also be of interest of foreign players. Even the changes to the taxation including the relaxation on enquiries from the tax department on startup valuations at the time of raising funds from foreign investments shall act as a booster.
Overall the budget seems to be highly optimistic but yet the big challenge remains as to how the government will be funding these ambitious goals as the numbers are yet to be released and the government has provided for very limited sources of additional revenue. However, considering the pace of work done by the Modi Government in its last term, even these targets seem achievable.
(The author is Managing Partner, Sameer Mittal & Associates LLP and President, International Trade Council in India)