Finance Minister Nirmala Seetharaman on Saturday presented the government’s $428 billion budget for 2020-21 with a clear focus to revive the slowing economy but the budget received more criticism then applaud at home and abroad.
The finance minister announced a series of modest initiatives, including planned investments in new roads and airports and personal income tax cuts, along with an increase in bank deposit insurance to reassure customers rattled by high-profile bank failures. However, that seems to have not appealed the common man with Sensex dropping over 700 points and touched an intra-day low of 40,015.37, 708.12 points lower than the previous close of 40,723.49 points.
“Our government shall work towards taking the country forward so that we can leapfrog to the next level of health, prosperity and well-being,” said finance minister, Nirmala Sitharaman, while announcing the budget.
In the UAE, Non-Resident Indians, NRI, express mixed reactions to the union budget 2020.
Yusuffali MA, Chairman – Lulu Group International
Must say a promising budget with stress on agriculture and education. Especially the 16-point action plan to boost Agri-sector and allowing FDI in the education sector is surely going to secure the future of India. As said rightly by the FM, Entrepreneurship is the strength of India and the establishment of seed funds to boost early-stage start-ups.
Dr Azad Moopen, Founder Chairman and Managing Director, Aster DM Healthcare
The Union Budget, prepared in a difficult economic scenario has managed to create opportunities for growth within limited resources. It is good to see that the Finance Minister has provided some benefits in the union budget for the healthcare sector like eradication of tuberculosis in the country by the year 2025 is a great step towards healthier India.
Rizwan Sajan, Founder and Chairman of Danube Group
Overall it is a balanced budget with more commitments towards Agriculture, Infrastructure, Transportation and Healthcare. The biggest takeaway appears to be for farmers when the administration expressed plans to double their income by 2022. Additionally, big tax relief for lower and middle-income groups will be an incentive for individuals to spend and thereby increasing consumption, which will be beneficial for brands like us.
Adeeb Ahamed, Managing Director, LuLu Financial Group
“It is encouraging to see the government opening up the education sector to FDIs. We are also positive about the move to increase overseas investment limit in the insurance sector, which will enable foreign players with competitive products and new technologies to enter the market.
We also welcome the Finance Minister’s proposal to increase the investment limit of Foreign Portfolio Investors in corporate bonds from 9% to 15%. This provides more room for foreign investors to penetrate the Indian market. More importantly, FPIs in infrastructure funds, can enjoy exemption in long term capital till 2024. Further, the opening up of government securities for foreign investors will encourage the NRI community to play an active role in strengthening national assets. The decision to scrap DDT will also be of benefit to NRIs residing in countries with lower tax regimes
The worries: “On the flip side, we were hopeful of more initiatives to develop the tourism sector, which has the scope to create lakhs of jobs and invite foreign investments. The lack of clarity on government initiatives and benefits for investors, is a cause of worry as this is a capital intensive sector.
There is also discrepancy about the ministry’s proposed move to tax expats who stay in India for 120 days or more at a stretch, and more details are needed to understand this new definition of an NRI as someone who has to stay out of the country for 240 days.”
Kamal Vachani, Group Director of Al Maya Group and Regional Director of ESC
Vachani, who is also President of Dubai Chapter of Global Organization of People of Indian Origin (GOPIO), welcomes the budget 2020. The announcement of the new project to improve electronic production by Finance Minister is a great welcome step as this will increase the domestic production of electronics and IT industry and boost the economy further and also ‘Make in India’ will get a big boost.
The government’s plan to encourage the manufacture of mobile phones, electronic equipment and semiconductor manufacturing as well as medical devices is a positive step too for the Indian companies which will be a boost to electronics exports.
Income Tax rate cut to 10% from 20% for individuals having income between Rs.5 lakh to 7.5 lakh is a welcome step which gives big relief to medium-income people to save more money of their hard earnings. Reduction in Corporate Tax, five years tax-free for new start-ups, scrapping of DDT on companies are welcoming steps.
Huge allocation for the agricultural sector will greatly benefit the farmers and generate millions of new jobs in the rural sector, which will boost the agricultural economy in a big way. Agri exports will also get a big boost.
Dr. Thumbay Moideen, Founder President, Thumbay Group
The budget focuses on infrastructure development and creating a favorable business climate, to prepare the economy for new challenges of the upcoming decade. Noteworthy aspects include the emphasis on digital connectivity as well as new and emerging technologies.
Jitendra Gianchandani, Chairman of Jitendra Consulting Group
The Union Budget is a holistic and integrated budget, focused on promoting the ‘ease of living’ for a common man and ‘ease of doing business’ for SMEs, MSME’s and corporate.
“We greatly welcome the government’s 16-point action plan to boost agriculture, towards the goal of doubling farmers’ income by 2022. Huge allocation for the agricultural sector will also greatly benefit the farmers and generate millions of new jobs in the rural sector, which will boost the agricultural economy in a big way.
The government has lived up to the overall expectations in several ways. This budget restores some of the lost confidence in the India growth story – and more importantly, within India Inc.
Abolition of Dividend Distribution Tax (DDT) for corporates is another bold move that will help them to diversify or expand their business and also make India an attractive destination for investors, thereby boosting investments.
Unfortunately, the Union Budget is silent regarding NRIs and many of the demands and suggestions to benefit them have not been considered.
Paras Shahdadpuri, Chairman, Nikai Group
A mediocre annual budget without any fireworks. With India’s GDP sinking lower quarter after quarter, the industry was looking for a major stimulus. Our auto industry, real estate, employment for youth require a major boost. These are the barometers of the economy. Having said that, some positive steps have been taken by the Finance Minister by streamlining Income Tax for lower and middle-income groups, which will result in small extra liquidity in the hands of this section of the population thus generating consumption.
Anish Mehta (Chairman – The Institute of Chartered Accountants of India, Dubai)
This union budget 2020 is a positive move towards reviving the economy and has some very good initiatives for individuals, corporates and investors. However, there are changes in rules relating to the taxability of NRI income. We need to have detailed clarification and explanation of these amendments in order to assess the impact on the income of the Indian expats residing in the Middle Eastern countries. Also the real estate sector was expecting some initiatives to revive themselves, which I believe is missing from the budget speech.