Finance minister Nirmala Sitharaman gave the longest budget speech in the Parliament, clocking over 2 hours and 30 minutes. Budget 2020 comes at a time of the worst economic slowdown the country has witnessed in over a decade. Will it be a harbinger of good times for the corporate sector and the common man? We asked the experts for their reactions on Union Budget 2020:
No concrete road map for economic recovery
Amit Upadhyay, Editor-in-Chief, The CSR Journal, said, “The theme of Budget 2020 was aspirational India, economic development and a caring society. The budget seems to have focussed mainly on the vote bank while ignoring the Aam Aadmi, be it CST or Direct tax. At the time of introduction of CST, the ultimate aim was to reduce the cost by implementing single tax system and avoid cascading effect of multiple taxes. Even after 3 years of GST implementation, the desired outcome is not to be seen. Under direct taxation, on the one hand, slab-wise taxation has been offered and on the other hand, the benefits of deduction and tax savings have been withdrawn.”
Said restaurateur Annie Bafna from The Nutcracker, “It appears that in an attempt to simplify the tax structure by doing away with exemptions while lowering tax rates, the government may have ended up actually complicating taxation for individuals by offering tax payers a choice between the old system and the new one. Not taking away LTCG and taxing dividends in the hands of recipients are negatives in my opinion.”
Upadhyay didn’t see any concrete strategy or road map to recover from the economic slowdown. “Besides, the budget does not address the issue of unemployment,” he said.
Budget 2020 left children out
Despite increasing cases of violence and rise in crime against children, the budget speech was silent on child protection issues, with no corresponding enhancement in the budget outlay for Integrated Child Protection Services. Said Bidisha Pillai, CEO, Save the Children, “A lot more needs to be desired to meet our demand for increasing public funding for Child Protection Services to 1.5% of GDP, for education to 6% of GDP and for health to 2.5% of GDP by 2021. This will ensure that adequate public investment for children is made so that we meet our 2030 SDG agenda.”
She added that although there is an enhancement in the education outlay, and marginal increase in budget, greater focus on ECCE and school education would have provided the required focus on children, especially for those in the age group of 3-6 years.
Boost for certain industries
Raja Sekhar Reddy, Founder, SquareMeal Foods (parent company of restaurants – Mirchi & Mime and Madeira & Mime), “A large chunk of the Union Budget 2020 largely focuses on boosting tourism and infusing positive funds towards infrastructure development, which is likely to increase footfalls at cultural/heritage sites and in turn improve the hospitality ecosystem in the vicinity. Moreover, surgical focus on digitization and connectivity is bound to expand business avenues and spur consumption through food aggregators.”
Jignesh Mehta, Founder & Managing Director, Divine Solitaires, “Budget 2020 has listed some interesting initiatives. Bringing down the direct tax rates is likely to positively impact people’s consumption patterns. This is a good thing for the gems and jewellery industry.
Impetus to entrepreneurs
“From the taxation perspective, while we would have preferred a revision in the tax input credit law, the reduction in personal income tax will go a long way in multiplying disposable income and boosting demand. The budget has also indicated favourable proposals towards supporting the MSME sector, like the introduction of investment clearance cell and easy availability of debt funding, which will provide an impetus to entrepreneurship and in turn generate employment opportunities in the sector,” said Reddy.
Jignesh Mehta agrees with him. “The boost that the government intends to give to the MSMEs could tremendously encourage development in the rural areas, which in turn will encourage growth,” said he.
Said Shailen Mehta, Founder and Managing Director, eJOHRI, “The introduction of an Investment Clearance Cell and seed funding will provide a boost to young entrepreneurs who are enthusiastically looking to build a bootstrapped business, and build sustainable revenue businesses.”
Healthcare in focus
Said Jiji John, Executive Director, Child Help Foundation, “Health and education continue to be in focus in Budget 2020. Only a healthy generation can ensure steady growth of individuals and the country’s economic progress. The holistic vision of healthcare to cover new diseases was a rather important decision since there’s a new disease outbreak at regular intervals.”
“The availability of medicines at affordable rates under Jan Aushadhi Kendras in all districts is a welcome move in addition to the holistic vision of healthcare and education,” said John. Pillai agreed with him. “The budget emphasis on holistic vision of healthcare, support to ODF plus intervention, strengthening public health infrastructure in select Aspirational Districts, and enhanced nutrition support are positive initiatives to ensure health services reach the most marginalized children.”
As for what was missing, John said, “There should be an increase in allocation of funds for upgradation of the hospital facilities to ensure basic services and quality medical facilities to the needy; the PPP (public-private partnership) model hospital is going to enable the same.”
“For the restaurant industry, the much-awaited and logical step of allowing input GST credit has not been considered despite it burdening an industry that employs millions but is struggling with high costs and low profitability/ returns on investment,” said Bafna.
Budget 2020 is technology-driven
Rajesh Uttamchandani, Director, Syska said, “We welcome the push provided by the Government for its Smart Cities mission. It aims to create 100 cities with state-of-the-art infrastructure that includes intelligent lighting, Wi-Fi access points, leading to enhancement of the quality of life of every citizen while building efficient living spaces for future generations.”
Shailen Mehta added, “The digital revolution plays a crucial role in the growth of the Indian startup ecosystem and Initiatives like online tax assessment, facial assessment, facial KYC will provide the much-needed stack, essential for the growth of startups.”
ESOPs have become instrumental in the Indian corporate and startup ecosystem to woo high-value employees and retain talent. According to him, exemption of taxes on ESOPs in Budget 2020 will further encourage companies to introduce ESOPs in their companies at a large level, which in turn will allow them to attract world-class talent while keeping employee costs in check.