- Finance Minister
Nirmala Sitharamanon Saturday announced Union Budget 2020which gave an impetus to the country’s digital ecosystem.
- The budget came up with an optional new tax regime which could lead to lower taxes for taxpayers.
- She also acknowledged the role entrepreneurs have played in creating more jobs and capital for the country.
The government also announced an optional new tax slab which has lower tax rates, although the people opting for the new tax regime will not get any exemptions. The FM also spoke about the role that entrepreneurs have played in creating jobs and bringing in more capital to the country.
However, there were a few industry experts who felt that the expectations from ‘the budget were much higher and it feels like a missed opportunity.’
Here are the views of some experts:
Ashish Bhasin, CEO, APAC and Chairman, India - Dentsu Aegis Network:
I think this is a good budget in some ways because it has attempted to put money in the hands of the middle class through rationalisation of tax rates as well as has concentrated on looking after the agricultural sector, including introduction of best practises like storage for producers and other measures. However, I do feel that the expectations from the budget were much more and it does feel like a bit of a missed opportunity. While it is good to see that the dividend distribution tax has been abolished, I expected more on the rationalisation of direct taxes, particularly the cess introduced over and above the tax rates. It is good to see efforts being made to encourage new-age skill development as well as helping the start-ups and what's particularly interesting is the proposal to set up data centre farms all over the country. This will prepare India for the economy of tomorrow. It is also good to see attempts at simplification of taxation through digitisation but the proof of the pudding will lie in seeing its implementation on ground. It would be fair to say that at best it is a mixed budget and while there are some encouraging decisions, enough does not seem to have been done for the situation the economy is in.
RS Sodhi, Managing Director of the Gujarat Cooperative Milk Marketing Federation:
Budget 2020, an excellent move, will bring more investments in the dairy sector which will increase the farmers’ bargaining power to get better prices for their produce, if done properly it will create 80 lakh jobs in Rural India and 16 lakh jobs in Urban India.
Anand Bhadkamkar, CEO, Dentsu Aegis Network (DAN) India:
The budget has provided relief to the middle class with lower tax rates which is a welcome move, as it will provide more liquidity. On direct taxes, the abolition of DDT and introduction of a tax dispute resolution scheme is a welcome step alongside tax reliefs for startups. The budget is focusing on easing and simplification of compliance, with changes in corporate laws as well as in GST and direct taxes. However, I was expecting further simplification of cess and surcharges beyond tax rates across slabs. The proposals for development of road infrastructure, setting up data centre parks and skill development initiatives are welcome steps in addition to allocations for social welfare schemes. However, the expectations from the budget were high on the background of current economic slowdown, and as such seems to be short on matching those expectations, with no specific industry sector focused sops to provide stimulus. While the budget shows focus on long term growth and social development, overall in the current scenario it looks like a mixed budget, falling a bit short of market expectations of more corrective measures.
Mukesh Kalra, Founder & CEO - ETMONEY:
The Finance Minister's proposal to introduce a new tax regime is a great step towards giving equal chance to every Indian in the lower income segment to maximize their post tax incomes. In the old regime, an individual supporting a larger family & negligible savings was forced to pay higher tax compared to an individual supporting a smaller family or one with no dependents. This created disparity when it came to effective taxation for the former group. In the new regime, the disparity ends & also frees up income in the hands of individuals to give a boost to consumption.
Nishant Pitti, Co-Founder & CEO, EaseMyTrip:
In tune with the present government vision to encourage Indian travellers to travel more and contribute towards the nation's growth, this budget takes it a step ahead. The budget has focused on promoting tourism & travel with an overall budget of Rs. 2500 crores in year 2020-21. Government aims to develop 100 more domestic airports under the UDAN scheme. To promote travel via railways, the government will focus on more Tejas type trains that will connect tourist destinations in India. The Finance Minister has also laid stress on the development of archaeological sites into iconic sites with on-site museums. Five such sites are- Rakhigarhi, Hastinapur, Shivsagar, Dholavira and Adichanallur. Government has also announced the renovation of 4 key museums. Rs,150 crore have been allocated for the ministry of culture in 2020-21. We are hopeful that this budget will open new avenues for the travel industry.
Sabyasachi Mitter, Founder and Managing Director of Fulcro:
The key takeaway for me has been the simplification of tax regimes as well as giving a boost to consumer and investor sentiments. The removal of DDT is a significant move and long overdue as it effectively leads to double taxation. Simplification of personal Income Tax rates by giving the option to tax payers to avail the reduced tax rates by not availing deductions is a welcome step towards a future free from the historical legacy of compliance issues. The focus on encouraging start-ups is also welcome, both in terms of giving relief to the ESOP taxation which has been increased to 5 years. The turnover of availing 100% income Tax benefit has also seen two key changes; increasing the turnover threshold to 100 crores as well as increasing the block of years from which to avail three years of exemption to 10 years from the 7 years presently. All of these will increase the cash in hand of corporates, individuals as well MSMEs leading to a spur in demand. Specifically to the digital ecosystem the aggressive plans to increase the coverage of Fiber to Home being extended to 1 lakh gram panchayats will give a significant boost to the digital ecosystem. The recognition of the need for data and therefore the policy announcement on data centre parks is also a welcome move.
Anish Sarkar, CEO, Sodexo BRS India:
Sodexo always believes in giving our consumers the freedom of choice; the tax proposals in the budget are also on a similar philosophy. We believe that consumers should have a higher purchasing power – while this announcement will give them the power to choose their tax structure, our consumer base will continue to benefit from the current regime. Sodexo’s solution suite goes much beyond tax-saving products; driving the digitization of corporate cafeterias & factories along with digitizing expense management to achieve workplace efficiency. We are very focussed on enhancing the employee experience of our clients by creating an ecosystem of value-added benefits much beyond tax savings.
Devendra Shah, Chairman, Parag Milk Foods Ltd:
We happily welcome the government's big push to the India's dairy industry. We are excited to be a part of the government's plan to double India’s milk processing capacity. Strategic measures like increasing the coverage of artificial insemination and eliminating Foot and Mouth Disease (FMD) and Brucellosis in cattle will result in higher yields. While such measures are welcomed, the dairy sector also needs to ensure the yearlong availability of green fodder. We can currently import the green fodder from Australia, Canada and USA. All these collectively help in Increasing milk consumption amongst urban and rural consumers thus attracting new investments and jobs.
Navin Khemka, CEO, Mediacom South Asia:
What is required is more purchasing power to the Indian middle class. This will help boost demand in the sluggish economy. I hope the investment in infrastructure and kisan express helps in achieving this objective in the long run. Short term, however, I think this budget is status quo. Demand growth could be sluggish and this could continue to impact media investments by corporates.
Indroneel Dutt, CFO, Cleartrip:
The government has backed its vision to turn India into one of the world’s top tourism hubs by allocating INR 2,500 crore for promoting tourism in general and setting aside a sum of INR 3100 crore for the Culture Ministry to boost regional tourism. What would be wonderful is to have an empowered nodal body comprising of the Govt / OTA / airline, hotel and other industry representatives with the objective of promoting discoverability, ease of booking and fulfilment of our cultural, natural and heritage sites. Introduction of more Tejas Express type trains and the inauguration of several culturally-significant archaeological sites are other much-needed moves.
We also welcome the Hon’ble FM’s proposal to develop 100 more airports as well as the doubling of the airline fleet by 2024. This calls for skilled manpower development in parallel. The aim to double the fleet to 1200 in the next 3 years will certainly accelerate the passenger growth rate.
Ramesh Kaushik, VP Brand Experience at Blackberrys:
The government remains committed to accelerate consumption in budget 2020. Government measures of reducing corporate tax and initiatives to boost MSME sector will definitely help accelerate industrial and corporate growth in the country. Measures like simplifying GST and income tax relief are sure to give requisite push to consumer consumption and demand thereby accelerating growth across industries. Additionally allocation of funds for infrastructural development is a welcome move clearing path for expansion. We expect more measures/announcements specific to the retail industry from the government in the coming future that will give the right impetus to the industry.
Sameer Makani, Co-Founder and Managing Director, Makani Creatives:
Sudhanshu Agarwal, Founder & Director, Citykart:
The announcements made by the government in Union Budget 2020 are a promising move to boost the income and purchasing power of people. So far, the rollout of GST has resulted in gains of about Rs.1 lakh crores to consumers, which is likely to increase further with revised GST laws being implemented from April 2020. Simplification of GST norms will be significant in inspiring consumer demand & consumptions and spur industrial growth. Additionally, allocation of Rs.100 lakh crores for infrastructure development also opens growth prospects for the brands in non-metro cities. However, we feel specific measures pertaining to the retail sector have still not been fully addressed in the budget.
Kunal Lakhara, VP of Finance and Operations, Pocket Aces:
Budget 2020's revised fiscal deficit target of 3.8% of the GDP seems more realistic and focus on spends/benefits was required to boost the economy. The thrust on entrepreneurship and tax regulations for both startups and taxpayers is a move in the right direction. India is the third largest startup hub globally and the announcement of an investment clearance cell to provide end-to-end support to startup founders will encourage more youth to be job creators. Further, the ability to defer taxes on ESOPs will democratise wealth creation for startup employees, ensuring the right talent is benefitted. Finally, the decision to grant 100% tax exemptions to sovereign wealth funds on their investment in priority sectors will provide the much needed funding boost to the sector and create value in the longer run.
Sahil Vaidya, Co- Founder & Director, The Minimalist:
Following the announcement of the Union Budget 2020, one thing is certain, is that the Government is heavily focused on becoming an entrepreneurial superpower. By investing in the MSME sector, the Government’s support towards new companies will go a long way in producing high growth business. Furthermore, the tax waiver on ESOPs will enable more talent to place their bets on early stage disruptive start-ups, which have the potential to become the corporates of tomorrow. Among other sectors, the Budget 2020’s focus on start-ups and technology will be a boost to companies that are doing some cutting edge design thinking to enable the best of digital products for a booming digital economy.
Sanil Jain, Co-founder, CupShup:
The start-up ecosystem in India is not more than a decade old and has come a long way to become the third largest in the world after USA and China. 2019 was not what we can call a good economic growth year but this budget has definitely brought some relief to start-ups. The implementation of the Investment Advisory Cell will aid new start-ups. Deferring the Taxation on ESOPs is definitely a big win as it will go a long way in acquiring and retaining quality talent. While on the other hand, decreasing direct tax to a historic low of 22% will boost export opportunities and drive growth across various industries.
Nikhil Mathur, Managing Director – India, GfK:
The proposal to boost rural economy, infrastructure and enhance purchasing power of middle class, if implemented well would certainly be fruitful. It could further improve the consumption of consumer durable and electronics. As per GfK data, CE-MDA category registered a volume growth of ~9% in 2019/2018. I think the market is expected to grow in the back of technology companies and given the state of economy we can be hopeful of a better future. Besides, encouraging local manufacturing of mobile phones and semiconductors may fuel the ‘Make in India’ vision.