Mixed Reactions to India’s Interim Budget from Industry
India’s Interim Budget 2019–20 was presented in the Parliament by Union Minister for Finance, Corporate Affairs, Railways and Coal, Piyush Goyal.
Nasscom
The budget presented today by the Mr. Piyush Goyal was on expected lines and an attempt to drive much needed growth in the economy by providing special provisions for the less served communities including farmers, SMEs, women and senior citizens.
In line with the vision for a digital India, budget 2019 focused on giving an impetus to technology integration and penetration. With the plan to convert 1 lakh villages into Digital Villages over next five years, introduce electronic tax return assessment in the next 2 years, comprehensive digitization for customs transactions and support for 3 lakh CSCs to render digital services. The highlight of the budget was the announcement of the a National Center for Artificial Intelligence and the AI portal. This will play a key role for India to accelerate AI development and adoption to the last mile. We look forward to partner with the government for this key initiative.
While, the finance minister focused on education, jobs, and start-ups, the industry’s key ask towards abolition of Angel tax, and various GST clarifications did not a find mention. We hope that these will be resolved through a due consultative process. Additionally, in line with the 10 dimensions of the Govt’s 2030 vision, we also believe that there must be a national initiative on reskilling to create future ready talent.
Arun M. Kumar, Chairman and CEO, KPMG in India
The interim budget is a bold attempt to make India’s growth more inclusive. The increase in allocation for agriculture and rural sectors stands out. It aims at stimulating consumption by reducing the burden on the middle-class. The budget aims to expand the formal economy; the 2% interest subvention scheme for GST-registered MSMEs is likely to encourage more firms to be covered by GST. The extension of affordable housing benefits should create new momentum in real estate activity in the country. The budget lays out a vision to make the country ready for next generation challenges.
K. Kumar, Partner, Deloitte India
“In a number of ways, the budget was on expected lines. For some time now, the big push to address the agricultural sector difficulties was being spoken about. It will be interesting to see how the new proposals sit with what is already in place or what some of the new administrations in states that went through elections seek to implement as loan waivers
The focus on the workers in the unorganised sector was expected and welcome
Fiscal deficit being contained is good and will help the long term stability. In turn, this will aid demand creation and investment in the capital goods sector. The pertinent question is what is kept outside the balance sheet, as some economists and CAG point out and if that will come back to haunt the economy later
The changes made to the personal income tax structure may help with sustaining demand for appliances and domestic goods. Further, the interest subvention, cash transfer, etc may help rural demand for appliances
The investment in railways and defence can potentially accelerate in the manufacturing sector, assuming these investments are quickly converted into projects
Given the nature of the budget, it is understandable there is no mention of private participation in infrastructure building. While it is important for the economy to have a significant role for private sector in this sector, that is being left to the incoming government.”
Dr. Raghupati Singhania, CMD, JK Tyre & Industries
“As expected this is the election year. Roll-out of series of sops for the farmers and middle class, assured farm incomes and direct transfer for small farmers are definitely going to bring some relief but there is much more needed to alleviate farm distress in our country. Tax-breaks and pension schemes for workers in the unorganized sector are good measures. However, there is nothing specific to boost economic activity which is the need of the hour.”
Shekar Viswanathan, Vice Chairman & Whole-time Director — Toyota Kirloskar Motor
“The overall budget perspectives are positive covering wide spectrum of areas as health, skill, infrastructure, agriculture — as a big boost to the economy. The resource allocation across the budget has been thoughtful. The fiscal deficit at 3.4% of GDP reflects better economic stability with the impact on inflation outlook being relatively muted. As we see, the continuing path of fiscal incentives would be growth positive, accelerating the nation’s development. Further, the thrust on overall rural development will certainly accelerate the buying sentiments of the consumers and also the increased tax exemptions will enhance the disposable income of the people, thus contributing to the upliftment of the society with improved living conditions.
The focus to strengthen the infrastructure [road, rail & air] will certainly facilitate industrial growth and promote ‘Make in India’ paving way for better mobility & accelerate the ease of doing business.
We applaud the Government of India’s focus on EV drive towards reducing fuel import. Toyota has been a pioneer in electrified space offering alternate mobility solutions [HEVs, EVs, FCVs, PHEVs] globally. We would further continue our concerted efforts in this direction to boost sustainable mobility to enhance ever-better & comfortable living of the society. The vehicle emission based tax regime would boost this EV vision, towards achieving a cleaner and greener environment.
We hope that the tax revenues will continue to grow, enabling the implementation of the budget announcements. We now look forward to the full-fledged budget that would be presented during May-Jun this year.”
Dr. Waman Parkhi, Partner, Indirect Tax, KPMG in India
The interim budget 2019–2020 is more a report card of the Government as was expected than a document providing for changes in the tax structure. The few changes that were announced like the PM-KISAN scheme for farmers, increase in pensions and gratuity, tax reliefs for small taxpayers and salaried class- are more focused towards the lower income categories. What is worrying however is that once more the fiscal deficit target is missed. Achieving 3%fiscal deficit target by 2020–21 now looks difficult unless there is a sharp increase in the tax collection and better monitoring of expenditure.”
Sachin Menon, Partner and Head, Indirect Tax, KPMG in India
The interim budget focused largely on social welfare measures, infrastructure development, digital India initiatives, relief for middle class / lower middle class, ease of doing business and simpler tax compliances. As expected, the interim budget attempted to highlight the government’s achievements as well as provided quick glance at the planned manifesto for upcoming five-year tenure.
As part of GST and Customs reform announcements, the Union Finance Minister reiterated and emphasized on various initiatives taken over past years towards improving compliance through digitization of GST compliances, rationalization of tax rates, composition schemes, etc. As majority of the GST reform decisions are managed by the GST Council, no new GST announcements were made. Having said that, as a curtain raiser, the Government showed its commitment towards addressing the long impending proposals on rationalization of GST rates for under construction projects, increase in threshold limits for MSMEs, improving digital compliances. From Customs perspective as well, focused initiatives have been launched towards single window clearances and digitization in documentation. There has also been recent customs duty rationalization to boost ‘Make in India” movement for automobile and mobile manufacturing industry in India. Further, the increase in Income Tax limits would result in more money in the hands of salaried class, which in turn will fuel consumption especially in FMCG, Automobile and real estate sector.
Though the Government could not take any major actions through this interim budget, it has delivered a strong message for its long-term vision and political manifesto.
