Budget 2020-21: Measures announced show a clear thrust towards improving the competitiveness of Indian businesses and Indian citizens while providing liquidity in the hands of taxpayers.
- Anshu Budhraja
Union Budget 2020: The first Union Budget of the decade has presented significant measures and policy reforms at a time when the economy has been experiencing a slowdown due to both domestic and global factors. Woven around the three central themes of aspiration, economic development and caring society, the measures announced show a clear thrust towards improving the competitiveness of Indian businesses and Indian citizens while providing liquidity in the hands of taxpayers.
Reduction in income tax rates
The Government’s decision to lower the income tax rates and bring in a progressive tax regime is a welcome move which will provide higher spending power to the common people. Reduced tax rates augur well for the FMCG industry as more disposable income will help bolster the consumption of the branded daily products in both urban and rural markets, paving the way for accelerated economic growth.
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Reviving the agricultural sector and rural economy
Aligned with the Prime Minister’s vision of doubling the farmer’s income by 2022, the Union Budget has put forth comprehensive measures to improve productivity. Considering that purchase behavior in the rural markets is mostly linked to the farm output, such focused efforts will help in alleviating the distress in the sector. This will strengthen growth prospects for the FMCG industry, which has registered slower growth last year because of dampened demand in the rural markets and inflation.
Focus on MSMEs and Entrepreneurship
With measures such as restructuring debt for the MSMEs and proposed investment clearance cell, there is an increased thrust on entrepreneurship, which will lead to more jobs and self-employment opportunities. These efforts will also bring great relief to small business owners, which, in turn, will translate into stability and growth of the sector and sustain existing businesses. This also gives a huge opportunity to the direct selling industry, which is enabling entrepreneurship, especially for women in our country.
The proposal of digitizing the refunds of duties and taxes to exporters will go a long way in establishing India as an export-oriented economy. The initiative to strategically develop every district in the country as an export will help strengthen local economies while also boosting employment on a large-scale. Under the NIRVIK scheme, the simplified procedures for claim settlement will immensely help the MSMEs currently exporting their goods and will also encourage first-time exporters to explore global opportunities. The Government has also done away with the dividend distribution tax, which is a welcome move since it will position India as an attractive investment destination.
Enhanced focus on nutrition
As a nutrition and wellness company, it was heartening to witness the special emphasis laid by the Government on the nutritional status of children, adolescent girls, pregnant and lactating mothers. Aligned with one of the central themes of Budget i.e. a caring society, the planned allocation over INR 35,000 crores to nutrition-related programmes is another welcome move. That said, it remains to be seen how the funds will be utilized and to what extent. The Government must continue to work towards a consistent and sustainable approach to address
nutrition-related health issues. Given the focus on a holistic healthcare system, we were looking
forward to GST rationalization on healthcare supplements from 18% to 5%.
Education and skill development
According to recent estimates, India will have the largest working-age population in the world by 2030. Hence, providing quality education and skill training becomes all the more important while addressing the employment challenge. Currently, there is a mismatch between the supply of skills and demands, especially in new age digital technologies such as artificial intelligence, machine learning, cloud computing. Hence, the recommendation of a one-year internship for fresh engineers with urban local bodies will boost employability and bridge skill gaps.
The budget 2020 also laid significant emphasis on infrastructure development, which is required to enhance the efficiency of production and transportation, generating substantial employment opportunities, besides providing economic incentives to the public and private sectors, leading to faster economic growth.
There has been a strong focus on fundamental sectors such as agriculture, infrastructure, MSMEs, health and education, which we believe is necessary to provide impetus to the Indian economy. While there were no direct benefits for the Direct Selling industry, some measures announced will positively impact the sector. We hope the Government looks into the key expectations and acknowledges the unique positioning and potential of the DS industry, which can contribute to the growth of the economy and entrepreneurship. Overall, it’s an incremental
budget, and we await the fine print to understand the deeper implications of all the measures announced.
- Anshu Budhraja is CEO, Amway India. Views expressed are the author’s own.