(FREE) UPSC Current Affairs 2024 PDF

(GIST OF YOJANA) The Industry Perspective [MARCH-2020]

(GIST OF YOJANA) The Industry Perspective

[MARCH-2020]

The Industry Perspective

Introduction:

The Budget makes many choices, which if carried through, may result in a tectonic shift in India's Economic policy. The Finance Minister on 1 February, 2020 presented the second Union Budget of this tenure of the Government.
The Government of India proposes to spend Rs. 30,42,230 crore in 2020-21, which is 12.7% higher than the revised estimate of 2019-20. The receipts (other than net borrowings) are expected to increase by 16.3% to Rs. 22,45,893 crore, owing to higher estimated revenue from disinvestments.
The Government has assumed a nominal GDP growth rate of 10% (i.e. real growth plus inflation) in 2020-21. The nominal growth estimate for 2019-20 was 12%.

Targeting deficits:

Revenue deficit is targeted at 2.7% of GDP, which is higher than the revised estimate of 2.4% in 2019-20.Fiscal deficit is targeted at 3.5% ofGDP, lower titan the revised estimate of 3.8% in 2019-20. The Government Is estimated to breach its budgeted target for fiscal deficit (3.3%) in 2019-20 and the medium term fiscal target of3% in 2020-21.
This does not include off-budget borrowings (0.9% of GDP in 2020-21). Although, the deviationof 0.5% is consistent with Section 4(3) of Fiscal Responsibility and Budget Management (FRBM) Act, both for RE 2019-20 and BE 2020-21.
Section 4 (2) of the FRBM Act provides for a trigger mechanism for a deviation from the estimated fiscal deficit on account of structural reforms in the economy with unanticipated fiscal implications.
The Government has recognized the contribution of start-ups to the economy via incentives such as tax breaks on ESOPs for 5 years, tax rationalisation for start-ups withRs. 100 crore turnover and digital platform for start-up IPR. Measures For improving the ease-of-doing business such as the NIRVIK (NiryatRin Vikas Yojana) scheme, removal of Dividend Distribution Tax and simplification of the GST regime will boost investor’s confidence.
Micro, Small and MediumEnterprises (MSMEs) are the lifeblood of a vibrant economy; therefore, the budget has a focus on improving credit access and increasing cash in hand for these businesses. EnablingNon-Banking Financial Companies(NBFCs) to extend invoice financing to MSMEs through Trade ReceivablesDiscounting System (TReDS) will enhance the opportunity to fuel the Indian economy and widen the acceptability and trust by the Banking,financial services and insurance(BFSI) sector. The extension ofGovernment e-Marketplace (GeM)as a unified procurement channel will bring more vendors (from the current3.2 lac) onto the platform.
On the Debt Recovery side for lenders, the allowance to smallerNBFCs to approach the DebtRecovery Tribunal (DRT) for smaller ticket-size loans would be beneficial in lowering NPAs and improving the asset quality.
Recognising urban centres as the growth engines and giving importance to the role of the private sector, there are proposals to develop five smart cities, promote electronics manufacturing, solar infrastructure,more trains, airports and data centre parcs under the PPP mode. The tax proposals in the budget are directed towards creating trust, bringing uncertainty, attracting investments and reducing litigation.

Key highlights about the tax proposals:

The key features of the tax proposals that deserve a special mention are- reduction of tax rates for individual taxpayers in lower income range, the much-awaited abolition of dividend distribution tax,tax exemption on dividends, interest and capital gains investments by sovereign wealth funds, extension of the concessional tax regime to power generation companies, harnessing technology by enabling faceless appeals, relaxing compliance for MSMEs and the tax litigation settlement scheme.
On the indirect tax front, the development of an ecosystem for availing online refund of duties will provide relief to the exporters.
The Budget 2020-21 seeks to strike the right note with the prominent themes of aspiration,economic development, and caring society. These three broad themes are held together by:
Corruption free, policy-driven good governance.
Clean and sound financial sector.
Ease of Living.

a) Aspirational India

This part includes better standards of living with access to health, education and better jobs for all sections of the society.
The three components of aspirational India are:Agriculture, Irrigation, and RuralDevelopment, Wellness, Water, andSanitation, and Education and Skills.

b) Economic Development for all: “Sabka Sath, Sabka Vikas, Sabka Vishwas” (This part includes Industry, Commerce and Investment)

Investment Clearance Cell proposed to be set up to provide “end to end” facilitation and support and to work through a portal.
National Technical Textiles Mission to be set up with four-year implementation period from
2020-21 to 2023-24 to position India as a global leader in Technical Textiles.
New scheme NIRVIK to be launched to achieve higher export credit disbursement, which provides for higher insurance coverage, reduction in premium for small exporters, simplified procedure for claim settlements, turnover of GeMproposed to be taken to Rs. 3 lakh crore. A scheme for revision of duties and taxes on exported products to be launched. All Ministries have to issue quality standard orders as per “ZeroDefect-Zero Effect'' manufacturing.

c) Caring Society

The focus of caring society ison- Women and child, Social Welfare;Culture and Tourism.

Culture and Tourism

Allocation of Rs. 2500 crore for 2020-21 for tourism promotion.
Rs. 3150 crore proposed for the Ministry of Culture for 2020-21.
An Indian Institute of Heritageand Conservation under the Ministry Of Culture proposed; with the status of a deemed University.
Five archaeological sites to be developed as iconic sites with onsite Museums:
Rakhigarhi (Haryana), Hastinapur (Uttar Pradesh), Shivsagar (Assam), Dholavira (Gujarat), Adichanallur(Tamil Nadu).
Re-curation of the Indian Museumin Kolkata, announced by PrimeMinister in January 2020.Museum on Numismatics andTrade to be located in the historic Old Mint building in Kolkata.Four more museums from across the country to be taken up for renovation and recreation.
Support for setting up of a TribalMuseum in Ranchi (Jharkhand).
Maritime museum to be setup at Lothal-the Harappan age maritime site near Ahmedabad, by the Ministry of Shipping.
State governments expected to develop a roadmap for certain identified destinations and formulate financial plans during 2021 against which specified grants to be made available to theStates in 2020-21.

Conclusion:

The budget is a step forward towards meeting the aspirations of New India, but one of the most critical parts will be the implementation of the measures announced in the budget to support growth. The fiscal path leans heavily on the divestment proceeds targeted over Rs. 2 trillion to achieve the growth rates realistically in the current scenario. Any slippage on the underlying assumptions on revenue will impact the actual deficits and the growth ambitions of being a US$ 5 trillion economy.
The Finance Minister has focused on creating better standards of health, education and job creation for an aspirational India. At the same time, FM held forth on its focus of ease of living, enhancing farmer income, providing better opportunities for women as well as technological progress in areas such as automation, machine learning and robotics. Moreover, India has embraced the sharing economy and welcomed the digital revolution with open arms.
With the corporate tax being slashed to 22%, companies can now have bigger room to breathe and benefit from the assistance in funding through the investment clearance cell that has been proposed. The Government as taken a positive step towards enhancing the start-upecosystem by allowing 100%profit deduction for 3 years out of 10 years for start-ups with turnover up to Rs. 100 crore.