The Union Budget 2020 has been woven around aspirational India, economic development and caring society. Let us analyse the merits of various initiatives.
With the aim to reach the target of doubling farmers income by 2022-23, the Budget envisages ₹2.83 lakh crore of spending under a 16-pointaction plan on agriculture, rural development, irrigation and allied activities. This push to make farming more competitive in a liberalised farmer’s market will lead to higher tech adoption in farming, leading to enhanced produce and balanced use of fertilisers while keeping a check on the use of chemicals. The Kisan Rail, which is to be set up for the quicker transportation of perishable goods, along with enhanced warehousing facilities, will ensure the prevention of crop wastage.
In an effort to give an impetus to industrial growth, allocation for development and promotion of industry and commerce for 2020-21, has been pegged at ₹27,300 crore. The initiatives include setting up of an Investment Clearance Cell, to provide “end-to-end” facilitation, and developing five new smart cities in collaboration with the States in the PPP mode.
A National Technical Textiles Mission has been proposed, with an aim to position India as a global leader in technical textiles and NIRVIK (Niryat Rin Vikas Yojana), a new scheme is launched to support mainly small exporters with a vision of higher export credit disbursement.
Finance Minister Nirmala Sitharaman announced a scheme to encourage manufacturing of mobile phones, electronic equipment and semi-conductor packaging, with an intent to make India a global manufacturing hub.
Infrastructure boost
National Infrastructure Pipeline, which envisages a ₹100 lakh-crore investment over the next five years, aims to build 2,500 km access control highways, 9,000 km of economic corridors, 2,000 km of coastal and land port roads and 2,000 km of strategic highways. The Centre’s aim of providing a boost to infrastructure-focused skill development with the help of the National Skill Development Agency is a great initiative and will open up employment opportunities.
On bringing private capital into the banking system, the Centre plans to sell its remaining holdings in IDBI Bank to private, retail and institutional investors through stock exchanges. Whether this would lead to a positive impact is to be watched closely.
More transparency needed
The limit for NBFCs to be eligible for debt recovery under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (Sarfaesi Act 2002) is proposed to be reduced from ₹500 crore to asset size of ₹100 crore or loan size from existing ₹1 crore to ₹50 lakh. This will be facilitate the recovery mechanism.
The allocation of ₹99,300 crore for the education sector in 2020-21 is inadequate, though it could be compensated through a transparent FDI and ECB policy. ‘Study in India’ can be given immense boost through the same policies. More Asian and African students in India will surely boost the image of India as an international destination for higher studies.
The new personal income-tax rate system appears beneficial for the middle-class income strata, as taxpayers have the option of choosing the new, lower tax rate system, or stick to the existing income tax system with the benefit of deductions and exemptions. There still lies scope for further simplification of the tax structure. Further, the abolition of dividend distribution tax (DDT) will attract greater investments.
(The writers — Mayank Donald Shekhar, Priyanka Saraswat, Diya Murli, Pritiraj Brahma and Shamil Sadiq — are students at IFIM Business School, Bengaluru.)