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India’s Budget Is Equitable

The Finance Minister Ms. Nirmala Seetharaman presented the Union Budget 2019-20 on 5th July 2019.

 

 

Earlier the Interim Budget 2019-20 was presented in February this year. The Union Budget targets to become a $3 trillion economy in FY20 and $5 trillion in a few years. The fiscal deficit for FY 2019 at 3.3% of GDP. India's FDI flows in 2018-19 remained strong compared to global at $54.2 billion, 6 percent higher than last year. It has set up enhanced disinvestment target of Rs 1,05,000 crore in FY20 as against Rs 90,000 crore set in the Interim Budget. It proposes changes to kick-start domestic and foreign investment. The Budget wants to liberalize FDI in aviation, media, animation and insurance intermediaries. The Local sourcing norms to be eased for single-brand retail FDI. This will encourage FDI participation in such sectors. Easing of local sourcing norms for single brand retail will be good news for single brand retailers. To resolve the issue of Angel Investors Tax the startups and investors who file requisite declarations will not be subjected to any kind of scrutiny in respect of valuation of share premium. A mechanism of e-verification will be put in place and with this, the funds raised by startups will not require any tax scrutiny.  The Budget to set up a Credit Guarantee Enhancement Corporation. The Budget initiate steps for electronic fund raising programme for listing of social enterprises, voluntary organizations. This will improve market access and liquidity flow for such enterprises. India's sovereign external debt to GDP is among the lowest globally at less than 5% and external borrowings are planned.

IFL KuwaitThe Budget asks SEBI to evaluate hiking minimum public shareholding to 35 percent from 25 percent. It Proposes rationalizing and streamlining of KYC (know your customer) norms for Foreign Portfolio Investors (FPIs) to make it investor-friendly. The NRI portfolio route to be merged with FPI for seamless investment in stock markets. To allow FPIs/NRIs to subscribe to listed debt papers of Real Estate Trusts (REITs) and Investment Trusts (InvITs). Aadhaar cards to be issued to non-residents Indians with Indian passports after arrival in India without waiting for 180 days. The Budget to bring ETFs in line with equity-linked savings schemes of mutual funds to encourage retail investors. Interchangeability of PAN and Aadhaar card to be allowed for ease and convenience to taxpayers. ITR can be filed without PAN by quoting Aadhaar. Import duty to be hiked on gold and precious metals to 12.5%, from current level of 10%.

The State-run banks to get Rs 70,000 crore capital to boost credit. Fundamentally sound NBFCs to keep getting funding from banks and mutual funds to allow FIIs and FPIs investment in debt securities issued by NBFCs. This can improve participation in Indian debt markets.  A new PPP model will usher the new dawn of Indian railway.  Railways to be encouraged to invest more in suburban rail network via SPVs   Railway infrastructure will need an investment of Rs 50 lakh crore between 2018 and 2030. The government is developing 17 iconic tourism sites as world-class tourist centers to improve the flow of domestic and foreign tourists to these destinations. Currently, only 25% tax rate is applicable to companies with an annual turnover of Rs 250 crore. The Budget will lower 25 percent corporate tax to apply on companies with up to Rs 400 crore turnover, covering 99.3 percent of corporate India. 

Government has already moved GST Council to lower GST on Electric Vehicles (EVs) from 12 percent to 5 percent. To make EVs affordable the government will provide additional income tax reduction of Rs 1.5 lakh on interest paid on loan taken to purchase EV. This is a major boost to EV buyers considering EV demand have been below expectation. This is also the first time that private buyers stand to benefit from deduction in income tax through purchase of EVs. It Proposes investment linked tax benefit for manufacture of products like lithium batteries and solar chargers. The Budget has given thrust on sustainable development through above measures. The Budget proposes to reduce net owned fund requirements to Rs 1,000 crore from 5000 crore for on shoring of international insurance companies. This measure will encourage overseas Insurance companies to enter the Indian market.

Government to launch 'Study in India' programme to attract foreign students in higher education. National Education Policy to transform India's higher education system to global standards It will allocate Rs 400 crore for world-class higher education institutions in FY20. Reforms proposed for education sector will transform India into a knowledge economy and will significantly improve our human capital with rising aspirations. The Budget will increase India’s efforts to improve the skills of youth in newer areas such as Artificial Intelligence, Big Data, Robotics, etc valued highly within and outside the country to ensure they can secure high paying jobs both in India and abroad. On the whole India’s budget 2019-20 is equitable.

 

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