Mumbai: As Union Finance Minister Nirmala Sitharaman’s health failed at the fag-end of a 2.45 hour long speech while presenting the Union Budget for 2020-21, the markets – the BSE Sensex and Nifty tanked. The Sensex went down by 900.29 points to end up at 39,805.61 and the Nifty too tanked by 276.85 points to end up at 11,685.25 points. The budget of Saturday appears to be the complete opposite, rather a denial of the findings of the Economic Survey a day earlier.
Although the reduction in Income Tax slabs who do not wish to avail exemptions, taxing the recipient of the company dividend and exempting the company for the Dividend Distribution Tax (DDT), off-loading its shareholding in its state run Life Insurance Corporation (LIC), tax holidays for the real estate sector, the markets have given a thumbs down to the union budget.
One thing that stands out is the plethora concessions that have been showered on the GIFT City in Gujarat, Prime Minister Narendra Modi’s home state, making one wonder whether the budget was for Gujarat or the rest of the country. The projects migration from Maharashtra to neighbouring Gujarat still evokes unpleasant memories in Maharashtra.
Although the Centre has reiterated its commitment towards pursuing the Mumbai-Ahmedabad Bullet Train project, it remains to be seen now as to how the Centre now pushes the project ahead as the Shiv Sena led Maha Vikas Aghadi (MVA) has already voiced its opposition to the project.
What did raise commotion in the Lok Sabha was when the Union Finance Minister pegged the estimated Nominal Gross Domestic Product (GDP) growth for the year 2020-21 at 10 percent, on the basis of trends available. Barely a day earlier, in the Economic Survey the government had admitted to a GDP growth rate of 5 percent. With a sluggish industrial growth, job losses, the government still argues for a 6 to 6.5 percent growth rate for the next fiscal year.
Sitharaman stated that the revenue income receipts for 2020-21 are estimated at Rs 22.46 lakh crores while the Expenditure estimated to be Rs 30.42 lakh crores.
Her claims that the revised estimates for Fiscal deficit of 3.8 percent in 2019-20, shall budgetary estimates come down to 3.5 percent in 2020-2, and that the
Central Government’s debt burden has come down to 48.7 percent in March, 2019 from 52.2 percent in March, 2014, did not seem to have any takers in the Stock Markets.
The FM contention that the average household now saves 4 percent in monthly expenses after the rollout of the Goods and Services Tax (GST), runs contrary to the Economic Survey finding that Consumer Price Index (CPI), that is retail inflation, has in the last fiscal risen from 3.7 to 4.1 percent. Which means that the savings of ordinary people had, have evaporated.
As the poor Agricultural growth rate is collaterally affecting Industrial production, the Centre is trying to encourage the state governments to implement its model laws related to agricultural land leasing act, agricultural produce and livestock marketing, contract farming and services promotion facilitation act.
After having red-flagged Debt waivers as disrupting the credit culture, the FM announced further expansion of the NABARD credit Refinancing Scheme. For state’s like Maharashtra which have been bearing the brunt of the vagaries of mother nature, Sitharaman did not specify what comprehensive measures have been proposed in the budget for the 100 water-stressed districts.
Besides, waiving of audit for MSMEs, small retailers with less than Rs 5 crore turnover, tax holidays for real estate developers to encourage affordable housing, FM says that the GST has resulted in efficiency gains in transport and logistics sector, inspector raj has vanished, it has benefitted MSME sector. While trying to be protective for the MSMEs against cheap imports, moot question is will the government take on cheap imports from countries like China?
Although the government has talked about merger and amalgamating loss making Public Sector Banks (PSB) with the better operating ones, the government has not spelt out any moves to safeguard depositor’s interests in cooperative sector banks like Punjab and Maharashtra State Cooperative Bank (PMSCB). In the Economic Survey, the government had twitched its nose towards the PSBs arguing that their counterparts in the private sector perform much better.
With much of the tax rates on goods and services being determined by the GST Council, the FM had little to offer by way of tax reductions or rebates. We at The News 21 had disclosed as to how she overlooked suggestions for changes in GST tax slabs from state Finance ministers. We have already indicated that this could well be the last budget session for the FM.
