The first Budget of the new decade appropriately focused on holistic growth objectives by resorting to the escape clause permitted by the FRBM act even as the commitment to consolidation remains in place. The budget sets out goals for boosting income in agriculture and allied sectors, boost export and commerce, concentrate on physical infrastructure and promote much needed focus on the country’s human capital through health, education and skilling. In this regard, the proposal of encouraging foreign flows into education is encouraging. The focus on digitization to facilitate governance has been given a commendable priority and was underscored in this Budget as well. The idea of disclosing extra budgetary borrowings in the budget document is laudable as transparency would be welcomed by the investor community. The Government had introduced bold structural reforms in 2019 already through cut in corporate income tax and the spirit was continued in the restructuring of personal income tax rates and dividend distribution tax. These measures will help in reviving sentiment and boosting consumption demand especially at a juncture where the growth impetus has been receding.
Other targeted reforms undertaken such as extension of incentives for affordable housing and incentives for export credit are also welcome. The decision to divest a heavyweight such as LIC is bold and will help to augment the financing kitty significantly. The proposal to set up the Investment Clearance Cell, which will facilitate a single point support structure is a welcome move and will further ameliorate our “ease of doing business”. We are also heartened that the Government has not cut capital expenditure and has retained its focus on improving the quality of the overall spending.
In view of the fact that India requires considerable capital flows to augment our savings the move to enhance limits for FPI holding in corporate bonds and tax free incentives for sovereign wealth funds are positive measures.
