What budget has in store for us
There’s good news for MSME entrepreneurs, e-vehicle buyers and those wanting to buy homes at affordable cost
When newly-appointed Finance Minister Nirmala Sitharamanwalked into the Parliament to present the Union Budget for 2019-20 on Friday, she raised eyebrows for chucking the conventional black briefcase for the bahi-khata bearing the national emblem. And what was in it for us? Good news for MSME entrepreneurs, e-vehicle buyers and those dreaming of affordable homes.
In what could revive the Medium, Small and Micro Enterprises (MSMEs) in Gujarat, the budget introduced Rs one crore loan in 59 minutes. With Gujarat being a business hub, the changes will encourage a lot of entrepreneurs even as the government has allotted an amount of Rs 350 crore to the Interest Subvention Scheme for 2% interest subvention for all MSMEs registered for GST. Jaimin Shah, MD & CEO, Dev Information Technology Ltd was all praise for the budget.
He said, “The government is serious about making MSMEs an important growth driver to achieve the vision of becoming a $3 trillion economy. These benefits will provide a much-needed solution to problems faced by MSMEs in recent years. Creation of payment platform dedicated to MSMEs and pension programme for 30 million retail traders will further encourage business owners and help sustain small businesses.”
The budget has provided a major relief to those planning to buy their first home at an affordable cost. Additional deduction of Rs 1.5 lakh has been announced for interest on loans borrowed before March 2020 for homes valued up to Rs 45 lakh. No focus on jobs The budget brought in good news for the budding entrepreneurs too, as an e-inquiry mechanism will reduce human interference and prevent harassment.
However, with the nation reflecting a sorry state of employment affairs, the budget failed to address how it will reduce unemployment. Dr Pinky Desai, senior professor of St Xavier’s College said, “The growth rate of start-ups is not very impressive. The government has no plan of how to generate employment. They should clarify the number of people who will be employed in the sectors.”
Ahmedabad is being developed as a Smart City. With the budget seeking to increase the prices of CCTVs, she said, “The price rise of the CCTV makes little sense; it rather ought to be reduced to promote its installation and make the city a safer place.” The biggest flak the budget received is in the form of hike in price of fuel, as petrol and diesel prices were escalated.
Pradeep Chona, CEO Havmor Restaurants and Huber & Holly, said, “The excise on petroleum products will have an escalating effect on inflation.” He further added that the ignorance of the government in providing measures to tackle population growth may prove costly. “India will be the most populated country 2025 and exceed China by millions. Why does no one want to touch this burning issue?” he said.
The budget also provided a slew of measures to boost electric vehicles. A provision of Rs 10,000 crore has been made for three years for the industry. Further, to encourage people to buy e-vehicles, the government has moved the GST council to reduce the tax on e-vehicles from 12% to 5%, said Sitharaman.
The provision for a deduction of Rs 1.5 lakh on the loans taken to buy e-vehicles has also been introduced. With the government preaching sustainable development, e-vehicles will play a major role in the automobile market.
Sukhbir Bagga, managing director of Petal Group, told Mirror, “The e-vehicle proposal will not affect immediate mobility as it has been given by the government keeping the long-term benefits in mind. At present, there are not many e-vehicles in the market. When more products start coming in, people will invest in it. With high GST benefits, the consumer will invest in electric vehicles over time.”
Ravi Suri, president of Cargo Motors, said that along with a provision for the future, there could have been a relief to petrol vehicles currently in the market. “A respite was expected in passenger vehicles, which has not happened. The cost of operating e-vehicles is high and not everyone can afford it. However, they may play a major role in reducing the pollution. My only concern is that our country will take time to adapt to e-vehicles and we will also need to introduce affordable ancillary services of charging and battery.”
“The Union Budget is disappointing. It has failed to touch upon important issues like unemployment and water. While the government has plans to strengthen the sectors, there is no clarity on allocation of funds. Unfortunately, the budget did not reflect incomes and expenditures either,” said chartered accountant K D Shah.
The budget has re-emphasised the importance of GIFT IFSC as an emerging global financial services hub. The policy pronouncement regarding GIFT IFSC will give a tremendous boost to investor confidence both in India and abroad. Key measures related to aircraft-leasing business, reinsurance business and tax benefi ts, will enable signifi cant off shore fi nance activities to take place from India and create jobs in financial services industry. The setting up of Unified Regulator will further put GIFT IFSC in a fast track mode.
TAPAN RAY, MD & GROUP CEO, GIFT CITY
As anticipated, the Centre continues to showcase its serious commitment to realising India’s housing dream which is evident from the acknowledgement of ongoing liquidity crisis in the country. From measures announced for promoting inflow of FDI to domestic market for NBFCs, encouraging PPP for providing land to formulation of rental policy -- everything that we have been voicing, is looked into. Though we will be able to see the benefi t of regulation of HFCs to RBI only in times to come, and there was no need for putting a cap of Rs 45 lakh for availing additional interest deduction for home buyers. But, all in all, today’s budget will defi nitely provide thrust to hopes of the entire housing community.
JAXAY SHAH, CREDAI CHAIRMAN
It is a balanced budget but the excise on petroleum products will have a great escalating effect on inflation. The ignorance of the government in providing measures to tackle population growth may prove costly. India will be the most populated country 2025 & exceed China by millions. Why does no one want to touch this burning issue?
PRADEEP CHONA, CEO HAVMOR RESTAURANTS AND HUBER & HOLLY
The budget has given much-needed impetus to MSME sector. Introduction of benefits such as Rs 1 crore in 59-minute loan for MSMEs through a dedicated online portal and the Interest Subvention Scheme allocating Rs 350 crore for FY 2019-20, for 2% interest subvention on loans for GST-registered MSMEs, shows that the government is serious about making MSMEs an important growth driver to achieve the vision of becoming a $3 trillion economy. These benefits will provide a muchcneeded solution to problems faced by MSMEs in recent years. Creation of payment platform dedicated to MSMEs and pension programme for 30 million retail traders will further encourage business owners and help sustain small businesses. With these reforms, the future for MSMEs look very promising under Modi government 2.0
JAIMIN SHAH, CHAIRMAN, IT COMMITTEE, FICCI GUJARAT
(L to R)TAPAN RAY, JAXAY SHAH, PRADEEP CHONA, JAIMIN SHAH
Increase in import duty of gold from 10 percent to 12.5 percent will not only make gold dearer in the domestic market but will also give push to smuggling. However, the yellow metal being considered as the asset in our country, its sale will hardly be affected.
SHANTIBHAI PATEL, GEM AND JEWELLERY TRADE COUNCIL OF INDIA PRESIDENT
The budget is not sufficiently expansionary to lift the economy out of a deepening recession especially in the manufacturing sector. The growth of expenditures is under 12.5%, and that is just a wee bit above the nominal growth of GDP of 10% or so. There are no measures to raise private investment of an immediately acting kind. A good investment tax credit limited to the next 10 months with MAT removed could have acted to spur private investments.
Some enhanced transfers to rural India would marginally arrest falling consumption if done quickly enough. The push to electric in automobiles does not seem to have been strategised enough. The bound tariff s on many electrical components of automobiles where China leads would have to be raised substantially to seed their manufacture in India. Otherwise it could lead to a hollowed out assembly of electric vehicle, a-la solar panels as has happened.
The reduction in GST for e-vehicles would spur e-vehicle assembly only at the cost of full manufacture of diesel and petrol vehicles, thereby further adding to mess created in the auto industry which was one shining industry thanks to the policy laid out long ago of very high tariff s for assembled vehicles versus low tariff s for components.
The provision of around Rs 70,000 crore to re-capitalize the public sector banks is far too low and very late, since in waiting over the last several years the government had compounded the problem of credit flow. Make in India would suff er even more. Growth would fall further. Exports would also not move up since the exchange rates remain noncompetitive. The fiscal deficit target would however be met given the accountant and supply side perspectives that has informed the budget.
SEBASTIAN MORRIS, IIMA PROFESSOR
Some key positives of the budget include strengthening regulatory authority of RBI over NBFCs and bringing regulation of HFCs under RBI will have systemic implications for financial stability. Pension benefits to retail traders and small shopkeepers is a huge step towards bringing social security to these people.
The negatives include lack of clarity on the virtuous cycle of investment both in budget as well as in economic survey. The arithmetic does not match the proposition of $5-trillion economy in 5 years with 8% growth. Very little attention has been paid to education, particularly the primary/secondary education.
Both, the benefit of demographic dividend and creating a skilled labour pool for the world will remain a dream. Almost no mention about health - where is the proposal of enhancing health expenditure to over 2% of GDP from the current 1.1%? Farmers’ distress will continue to be drag on the economy and society.
Tax reforms and tax simplification measures especially moving to electronic invoice system from January 2020 will significantly reduce compliance issues.
ABHIMAN DAS, IIMA PROFESSOR
Promoting the Swayam Initiative – offering online open courses -- is a good move. There is greater focus on research and education as the National Research Foundation will fund and promote research. There will also be pooling of research grants from various ministries and disbursing them, preventing duplication of research projects.
The new educational policy will help transform the Indian education system. The 10-15% hike on year-over year could have been better, this is just inflationary change. The autonomy in education is good and I hope to see true implementation. India has the best brains in education, student and teachers, both, have earned their reputation in western countries. Time to do the same in India
SURENDER SACHDEVA, DPS BOPAL PRINCIPAL
(L to R)SHANTIBHAI PATEL, KD SHAH, SEBASTIAN MORRIS, ABHIMAN DAS, SURENDER SACHDEVA
The union budget has covered components that are favourable for corporates. Tax relief to corporates comes as a much-needed respite and is sure to create a better environment for businesses, which will in turn lead to the growth and economic development of the country.
ACHAL BAKERI, CMD, SYMPHONY LIMITED
The budget has hardly touched upon the subject of direct taxes. The budget is for the 125 crore non- taxpaying citizens as more than two hours were spent on agriculture, railways, river amalgamation, education, homes, electricity and water. Meanwhile, just 20 minutes were allocated for tax proposals. The 2% TDS on withdrawal of Rs 1 crore or more from a bank is definitely a good measure but it should not be Rs 1crore per bank but an accumulative amount of Rs 1 crore or more for the account holder. Otherwise, people will withdraw Rs 99 lakh from one bank and open 10 bank accounts.
SUNIL TALATI, FORMER ICAI HEAD
FM’s move to increase basic customs duty on tile and ceramic products from existing 10% to 15% will safeguard the domestic ceramic tile industry from the cheap imports, and strengthen the domestic industry. Tax reforms and tax simplification measures especially moving to electronic invoice system from January 2020 will significantly reduce the compliance issues.
KAMLESH PATEL, CHAIRMAN AND MD, ASIAN GRANITO INDIA LTD
(L to R)ACHAL BAKERI, SUNIL TALATI, KAMLESH PATEL
As expected the budget is reformist. The budget focused on agriculture, middle-class, youth and education as well. I am happy to see that youths were target positively and roadmap was laid out for start-ups which will generate a lot of employment. Roads and water infrastructure has been allotted more than Rs 1 lakh crore. Corporate tax deduction of 25 per cent and ‘Har Ghar Jal’ will be a great boost to this economy. Promoting e-car and cashless economy, faceless I-T submission shows government initiatives towards digital economy and fighting corruption. However, nothing major was delivered directly to the middle class or salaried employees. Increased custom duties will hinder jewellers and diamond industry.
CHIRANJIV PATEL, INDO CANADIAN BUSINESS CHAMBER CHAIRMAN
The 2% reduction in interest rate for MSMEs will help them in cutting the financial burden. Similarly, the government’s focus on repairing/ upgrading 1.25 lakh km of current road network will improve logistics and transport for industry. Earlier, corporates with annual turnover above Rs 250 cr had to pay 25% tax. Now this limit has been extended to Rs 400 cr. This will help firms in expansion or investing in smaller firms, leading to inclusive growth. However, move to put 2% TDS on cash withdraws over Rs 1 cr will be additional burden for the industry as there are many small firms bound to pay labourers in cash.
CHIRAG VORA, DIRECTOR, GUJARAT DYESTUFF MANUFACTURERS ASSOCIATION
Overall, it is a good budget. I was expecting the exemption limit to be higher. But it does not seem charming to people having fixed salary. Changes in the housing sector is laudable. The subsidy in e-vehicles is also appreciated as it was much need. Now the time has come where they need to encourage the usage of e-vehicle. It is a budget with vision. Even the allowance of Aadhar card in the paying procedure will be convenient to all.
MRUGEN SHAH, PRAKASH SCHOOL PRINCIPAL
The e-vehicle proposal will not aff ect immediate mobility as it is given by the government keeping the long-term benefi ts in mind. At present, there are not many evehicles in the market. When more products start coming in, people will invest in it. With high GST benefi ts, the consumer will invest in electric vehicles over a period of time.
(L to R)CHIRANJIV PATEL, CHIRAG VORA, MRUGEN SHAH, SUKHBIR BAGGA
The budget has provided space for the portal of woman uplift through aids in SHG. However, there was not a single sentence uttered on environmental protection through tax reforms. Our country is still a tax heaven for environmental issues.
MITALI ROZIA, RESEARCHER AT MICA
I liked that the budget focused on indirect tax. They have increased the value of stamp paper, in turn generating income for the State. Imposing indirect tax will lead to less corruption. If tax is being increased for people, govt must return it through nation development,
ADITYA DAVDA, ADVOCATE
Ease of investment proposed in this budget will boost growth of start-ups. From the overall budget presented it seems that now India will be soon become preferred destination for new start-ups. Start-up ecosystem will become very strong in coming days and will nurture fresh and new ideas executed by next generation.