Budget 2020 a balancing act but could have done more, says India Inc

By Anwesha Ganguly & Vikas Srivastava

Union Budget 2020: India Inc saw the Union Budget 2020-21 as a “balancing act” with little room for big-bang measures due to fiscal constraints. Personal income tax (PIT) rationalisation was largely seen as a step that would boost consumption. Measures announced for the agri and infra sectors are also expected to boost growth.
However, industry participants felt more could have been done, especially for the stressed auto sector and towards rationalising GST rates. “The nation was requesting kuch ‘caro na’ to her, however she had little room to manoeuvre,” RPG Enterprises Harsh Goenka chairman wrote on a micro-blogging platform.

“Given the constraints in the economy, the FM has done a creditable job at balancing the need for an economy in a revival mode and fiscal orthodoxy… Given the job creation potential of the auto sector, which is currently in the depths of distress, the Budget could have done more,” Hinduja Group co-chairman Gopichand P Hinduja said .
The auto industry was disappointed as the much-awaited scrappage policy wasn’t announced’, nor any relief on GST. Auto players felt the Budget lacked direct benefits to help boost demand, especially with the upcoming transition to BS-VI vehicles, Siam president Rajan Wadhera said.

Infra measures, especially the tax exemption for sovereign wealth funds’ investments into infra projects, was seen as a positive. “The increase in the FPI limit for corporate bonds from 9% to 15% coupled with the laying out of red carpet for the SWFs at this juncture is good news for infrastructure projects as it will enable long-term funds, both equity and debt, to be invested in India,” Srei Infrastructure Finance chairman Hemant Kanoria said.
SpiceJet chairman and MD Ajay Singh said the announcement for 100 new airports under UDAN scheme would further strengthen the airport infrastructure space.

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Corporate India cheered the measures to boost agri income. But the government revised its full-year fiscal deficit target for FY20 to 3.8% of GDP from the earlier target of 3.3%. “By relaxing the fiscal deficit to 3.8 % and targeting 3.5% next year, the government has underscored its resolve to support the economy at a time when it needs a fiscal boost,” Ficci president Sangita Reddy said.

“On the PIT front, once we go through the fine print, we can comprehend better as to the modalities and advantages of the new optional income tax rate system and how useful it would be in increasing consumption demand,” Kanoria said.

“FM promises end to tax harassment to India Inc, correcting the Companies Act to decriminalise many non-compliance. A much-needed message to infuse trust,” Biocon MD Kiran Mazumdar Shaw wrote on social media.