The Union Budget is one step forward in transforming the quality of life of people, strengthening weaker sections of the society and ridding the country of black money, corruption and illegal political funding. The Budget shows the Government’s commitment towards rural sector, infrastructure and digital economy.
The highs
The reduction in cash donations to political parties from ₹20,000 to ₹2,000 per person is a bold reform aimed at bringing greater transparency and accountability in political funding and a push towards cash-less economy.
Bringing down the tax rate for individual assesses between incomes of ₹2.5 lakh and ₹5 lakh to 5 per cent from 10 per cent will boost spending among middle class, resulting in an increased contribution to GDP.
Nearly 22 per cent of Indian’s population is below poverty line. It is a brilliant proposal to levy a surcharge of 10 per cent to individuals whose taxable income is between ₹50 lakh to ₹1 crore. Those earning more than ₹1 crore are already paying a surcharge of 15 per cent, and will continue to do so.
Affordable housing has been given infrastructure status. With this, developers can access funds at cheaper cost. The demolition of Foreign Investment Promotion Board (FIPB) means there will be no sector under the approval route and everything will be under automatic route. It will improve the ease of doing business and ease the inflow of Foreign Direct Investment (FDI).
The fiscal deficit is maintained at 3.2 per cent of GDP, which is in-line with expectations. Government should improve these fiscal numbers by focusing more on disinvestment and higher tax realisation. The reduction of corporate tax to 25 per cent for smaller companies with annual turnover up to ₹50 lakh will make them more sustainable and MSME sector more competitive as compared to larger companies.
Long Term Capital Gain Tax in stock market has not been touched in the budget, and according to me, this is a great move. It had an instant impact on market, which registered a highest gain on budget day after long years. As an investor, I feel markets would have crashed had the Finance Minister changed the structure.
The lows
However, I feel that more can be done to enhance the research ecosystem in our country. The Budget should have focussed on research in higher education and research and development (R&D) in technology.
One of the biggest challenges in our country is job creation. Tourism, according to me, is one such untapped area, which has great opportunities to create for jobs. The tourism sector is relatively nascent and therefore, Government should do more to boost the industry.
No doubt, a Budget should serve the purpose of an economic as well as political statement. Considering the important assembly elections in five states, it was a subtle margin for our finance minister. Definitely, the Budget is a remarkable one after the historic budget of 1991, but how much of aid will it be for their political purpose remains to be seen.