The Honourable Finance Minister Sitharaman’s second full term budget pursued the goal of providing ‘ease of living’ to all citizens, through three broad themes, viz. Aspirational India, Economic Development and Caring India.
With India now being the 5th largest economy of the world, the government has made several policy announcements to leapfrog the nation to the next level of health, prosperity and well-being.
As expected, buoyancy of revenues could not be sustained owing to an Indian and Global economic slowdown leading to a slippage in Fiscal Targets. Consequently, the government relaxed the fiscal deficit parameters to 3.8 per cent of GDP for FY 20 and to 3.5 per cent of GDP for FY 21.
With a view to doubling farmers’ income by 2022, amongst other things, government has adopted 16 action points to indicate its focus. The government has also made several policy announcements viz. to develop five new smart cities in collaboration with states in public-private partnership (PPP) mode, commitment to the infrastructure sector and to further digitalisation for e.g. by building data centre parks throughout the country.
To further the government’s commitment to the welfare of women, this budget provides INR28,600 crore for programmes that are specific to women.
Several measures have been proposed to boost the financial sector to pursue the government’s target of reaching a USD5 trillion economy.
For personal taxpayers, the government has provided an optional rate cut package under the simplified personal income tax regime albeit at the cost of foregoing reductions and exemptions. A widely-anticipated change on the direct tax front: the abolishment of the Dividend Distribution Tax came through. This is set to benefit foreign as well as domestic shareholders.
The new dispute resolution scheme viz. ‘Vivaad Se Vishwas’ could help in reducing litigation in direct taxes where there are almost half a million direct tax cases currently pending resolution in various appellate forums.
In the domain of indirect tax, chiefly customs law, a number of measures have been taken for facilitating the ease of doing business in India. However, an increase in customs duties points to a growing trend of protectionism, which finds echoes in many parts of the world today.
It is hoped that there will be relentless execution of the good policy intent to ensure that India achieves its cherished target of becoming a USD5 trillion economy by 2024.