India: What I like about Union Budget 2020

A few weeks before annual union budget for financial year 2020-21 was to be announced, industrialist Anand Mahindra took to Twitter on this subject. He hailed Finance Minister Nirmala Sitharaman and asked her to surprise everyone with a “blockbuster” budget:

“So with a forecast rate of growth of 5% for our GDP in '19-'20 we'll fall behind them again? This should get our competitive juices flowing. @nsitharaman ji, let's surprise the world with a blockbuster of a budget including some dramatic moves. And sprint back in front..” - anand mahindra (@anandmahindra) January 13, 2020

Well, Nirmala Sitaraman did not surprise anyone. She did not ‘entertain’ anyone. Most importantly, while doing it, she did not do it in a manner which would prove her incompetent for the role. She presented the budget just like a prudent Finance Minister was to do it. Like it or dislike it, do not hope any drama in it. Nirmala Sitharaman means business.

While much of media has given mixed to negative verdict on the Union Budget 2020, I think it is because of their own unrealistic expectations. Anyone who is disappointed from this year’s budget had some unrealistic expectations.

Here are a few things I like in this year’s union budget:

What I Like About Union Budget 2020:

1.      New (Optional) Tax Regime: This was a really innovative idea and ‘bold’ too. Who could think that the govt would “dare” to do away with the old tax deductions. Earlier people used to say that they could do their savings in the ways they wanted and did not want government to force them to use some fixed set of options. By keeping it optional, government has also showed prudence. As analysts are saying, new tax regime is good for those in higher income bracket and people in lower income groups can decide to continue with old regime.

2.      Giving Better Tax Rebates to Startups: Startups with turnover of up to ₹ 100 crore can now claim 100 percent deduction on their profit for computing tax liability for three consecutive years out of 10 years since their incorporation. Earlier this turnover limit was only ₹ 25 Crores. Hence many more Startups would be able to take the benefits now.

3.      Deposit Insurance Coverage Increased: Govt has increased the deposit insurance cover to ₹ 5 lakh per depositor from the current level of ₹ 1 lakh. This will help millions of small depositors in events like recent PMC Bank crisis. This change proves that government is listening to people's concerns and making policies to help people.

4.      Dividend Distribution Tax Scrapped: Dividend distribution tax for companies will be scrapped, even if it causes a revenue loss of ₹ 250 billion to government. This is a major boost for the share market.

5.      Special Package for Jammu, Kashmir and Ladakh: The government has allocated ₹ 30,757 crore for Jammu and Kashmir, and ₹ 5,958 crore for Ladakh, both of which are new Union Territories.

6.      Budget Allocation for Controlling Air Pollution: ₹ 4400 Crores has been allocated for improve air quality in big Indian cities. This was a very timely decision and shows that our government cares for people’s health.

Other Good Decisions:

7.      Milk processing capacity to be doubled by 2025

8.      100 more airports will be developed by 2024

9.      150 New Trains will Operate under Public-Private Participation (PPP) route

10. Introduction of Freight Trains and Airplanes for farm products

11. 20 Lakh farmers to get "solar pumps" for irrigation

12. 5 new mass vaccinations to be launched

13. Push for direct benefit transfer (DBT) which avoids corruption

14. Concessional corporate tax rates for new local companies in mfg and power sector

15. 5 new cities to be developed as Smart Cities

16. Higher Allocation for Education (5% more than earlier)

17. Higher Allocation for Agriculture (5% more than earlier)

18. Higher Allocation for Health Sector (10% more than earlier)

Overall, I liked this year’s Union Budget for being financially prudent and not being political in nature. This year’s Budget proves that our government has India’s long-term benefits in mind and the ruling party is not like some other smaller political parties which waste public money for votes and political benefits. Hope the government continues in the same prudent, transparent and progressive ways. And we the people do our part too.

- Rahul Tiwary