By MS Unnikrishnan
Union Budget 2019 India: This Budget has ushered a fresh breath in policy announcement by the government. Instead of giving an account statement about the expected income and allocation of funds for various initiatives, finance minister Nirmala Sitharaman has given a vision of this government for the next 10 years and an action plan for the coming five years. She has very well articulated the areas of focus for immediate action by announcing recapitalisation of public-sector banks (PSBs) to the tune of `70,000 crore.
She also indicated that the Insolvency and Bankruptcy Code has settled defaulting accounts by almost `4 lakh crore. The Budget speech mentioned about the ongoing non-banking financial company (NBFC) crisis and measures to address the same. Although not sufficient, the government's commitment to undertake a credit guarantee for first loss up to 10% of the outstanding amount, totalling to `1 lakh crore, is a welcome move.
The finance minister reiterated the government's resolve to invest `100 lakh crore in the infrastructure sector over the next five years. In the absence of details of the financial budget, it will not be possible to comment on the revenue mop-up needed to support such a high level of capital formation.
Having said that, she did touch upon the creation of credit default swaps, interoperability between the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (Sebi), 100% foreign direct investment in the insurance sector as some of the key measures. The government intends to curtail tax terrorism (the FM cited the example of feeding an elephant versus allowing it to trample the paddy field), further reflected in the plan to simplify GST filing as well as online invoice printing proposals.
Measures to support new-age manufacturing in semiconductors, solar photovoltaic, lithium storage batteries, solar electric charging infrastructure, and tax concession of `1.5 lakh for loans taken for buying EVs are welcome.
It is understandable from the current financial situation that too many concessions are impractical, though the FM increased the corporate tax ceiling of 25% for companies having annual turnover up to `400 crore from the existing `250 crore. The industry should not expect miracles because we have many more issues to deal with, and the government will attend to them progressively.
A minor disappointment from the Budget is exports, which needed more attention, considering the mounting trade deficit. Indian industry needs support to achieve a level-playing field to compete in global markets.
This calls for improved fiscal policy and banking support, and I am sure the government will address these subsequently.
(The author is MD & CEO, Thermax)