I presented my point of view telling what should be done in The Budget 2020 to acheive the $5 trillion economy target. The Finance Minister Nirmala Sitharaman presented the longest budget ever in the history of independent India, but the budget seems to be long on words and short on numbers. This was one of the most difficult budget ever presented in the economy. The two-third of the budget was focusing on state issues, disinvestments in government’s assets, and the income tax cut. "The three things Budget is focusing on is to improve standard of living, boost economic development, and build a humane and compassionate society", is what the Finance Minister said.
Currently economy is struggling to revive growth, for which disinvestments in government’s stake is not a productive step, but government is doing it to cover the deficit. The Keynesian economics theory gave a simple solution to the Great Depression that government should increase the spending and decrease the tax, which simply boosts the consumption and also leads to wealth creation. The agriculture sector will get the highest investment of 2.83 lakh crore rupees, as government is aiming to double the farmer’s income by 2025. Around 30,000 crore rupees will be invested in development of Jammu & Kashmir, 1.7 lakh crore rupees on transport and 99,000 crore rupees on education. Few policies are introduced in the budget will lead to positive push in the private investments. The Finance Minister says,"We wanted to make sure money is in people’s hands", but there should be more focus on steps which can lead to immediate increase in demand to prevent economy to enter into recession.
Talking about the tax benefits, it is difficult to say that new tax regime will definitely be beneficiary to the economy. Tax experts are saying that income tax for less than 10 lakh income group will reduce whereas, income tax for 15 – 50 lakhs income group will increase. Also the 15% tax plus applicable surcharges and cess on dividends on the companies have been removed in this budget, this will result in higher taxations for investors. Government announced the corporate tax cut on 20th September 2019, which started a stock market rally, which is badly beaten up by this budget.
The stock market reactions to Budget 2020 is not as what we expected. The budget seems weak to the investors, there is some coronavirus threat also in stock market. Investors were expecting some relaxations on Long Term Capital Gain (LTCG) tax, which didn’t happen. The Sensex faced a downtrend of nearly 1,100 basic points on the budget day, decision of opening trading session on the budget day (Saturday) at NSE and BSE resulted painful for many investors. The job creation and ease of doing business for Micro Small and Medium Enterprises (MSME) is the most important factor to achieve the $5 trillion economy, this budget is not enough to achieve it. So, for now we should focus more on demand revival and growth acceleration rather than the $5 trillion economy dream, because “SAB CHANGA SI”, which means everything ‘was’ fine, but right now, nothing is fine.
Currently economy is struggling to revive growth, for which disinvestments in government’s stake is not a productive step, but government is doing it to cover the deficit. The Keynesian economics theory gave a simple solution to the Great Depression that government should increase the spending and decrease the tax, which simply boosts the consumption and also leads to wealth creation. The agriculture sector will get the highest investment of 2.83 lakh crore rupees, as government is aiming to double the farmer’s income by 2025. Around 30,000 crore rupees will be invested in development of Jammu & Kashmir, 1.7 lakh crore rupees on transport and 99,000 crore rupees on education. Few policies are introduced in the budget will lead to positive push in the private investments. The Finance Minister says,"We wanted to make sure money is in people’s hands", but there should be more focus on steps which can lead to immediate increase in demand to prevent economy to enter into recession.
Talking about the tax benefits, it is difficult to say that new tax regime will definitely be beneficiary to the economy. Tax experts are saying that income tax for less than 10 lakh income group will reduce whereas, income tax for 15 – 50 lakhs income group will increase. Also the 15% tax plus applicable surcharges and cess on dividends on the companies have been removed in this budget, this will result in higher taxations for investors. Government announced the corporate tax cut on 20th September 2019, which started a stock market rally, which is badly beaten up by this budget.
The stock market reactions to Budget 2020 is not as what we expected. The budget seems weak to the investors, there is some coronavirus threat also in stock market. Investors were expecting some relaxations on Long Term Capital Gain (LTCG) tax, which didn’t happen. The Sensex faced a downtrend of nearly 1,100 basic points on the budget day, decision of opening trading session on the budget day (Saturday) at NSE and BSE resulted painful for many investors. The job creation and ease of doing business for Micro Small and Medium Enterprises (MSME) is the most important factor to achieve the $5 trillion economy, this budget is not enough to achieve it. So, for now we should focus more on demand revival and growth acceleration rather than the $5 trillion economy dream, because “SAB CHANGA SI”, which means everything ‘was’ fine, but right now, nothing is fine.
Comments
Post a Comment