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  Business   Economy  02 Feb 2020  A balanced Budget despite several constraints

A balanced Budget despite several constraints

THE ASIAN AGE. | RENU SUD KARNAD
Published : Feb 2, 2020, 3:41 am IST
Updated : Feb 2, 2020, 3:41 am IST

The finance minister has been more realistic by assuming nominal GDP growth of 10% for FY 21.

Public expectation towards the Union Budget 2020 has been extraordinary especially at a time when the Indian economy is performing below its true potential. This is reflected in the fiscal deficit target pegged at 3.8% for FY20 and 3.5% for FY21.
 Public expectation towards the Union Budget 2020 has been extraordinary especially at a time when the Indian economy is performing below its true potential. This is reflected in the fiscal deficit target pegged at 3.8% for FY20 and 3.5% for FY21.

Public expectation towards the Union Budget 2020 has been extraordinary especially at a time when the Indian economy is performing below its true potential. This is reflected in the fiscal deficit target pegged at 3.8% for FY20 and 3.5% for FY21.

The finance minister has tried her best to present a balanced Budget in spite of facing many constraints and challenges — both local and global.

 

To encourage consumption, she has tried to leave more income in the hands of middle class tax payers, especially the ones who were not able to get all the tax benefits.

In order to promote affordable housing, the finance minister has extended the tax benefit on affordable housing loans by a year. Besides, tax holiday under Section 80IBA of the Income Tax Act for developers for affordable housing has been extended by a year.

As far as the funding constraint for the real estate sector, the finance minister spoke about enhancing the partial credit guarantee scheme for NBFCs, which is a good move, but  the ailing real estate sector needs much more. Real estate sector requires a huge push like the one-time restructuring of loans.

 

The finance minister has proposed a tax relief for buyers and sellers of property by allowing it to be valued at up to 10% below circle rates for calculation of stamp duty and capital gains tax. Earlier, this was 5%. This has the potential to remove the irritant in secondary market transactions.

The listing of LIC is a good move which will bring focus on the life insurance sector. The insurance industry will be watchful of the implication of the direct tax changes in the new tax regime.

The Budget has focused on the generation of employment and inclusive growth through increased expenditure on the rural economy and MSME.

The finance minister has been more realistic by assuming nominal GDP growth of 10% for FY 21.

 

The Budget provided tax benefit to the common man and focused on farmers’ incomes.

Focus on aviation, infrastructure, logistics, health, data centre park, renewable energy sectors and domestic manufacturing of network products should support the government to achieve expected GDP of 6.5% in FY 21.

— The author is managing director, HDFC Ltd

Tags: union budget 2020-21, income tax act