EASE OF LIVING- WALK THE TALK.

At the backdrop of slowing down of the economy and dwindling consumption the first budget from a full time NARI minister was awaited with lot of eagerness. With a set target to become a $3 trillion economy in the Financial Year 2020 and $5 trillion in a few years this budget was more of a mission statement than a plan for few months.

This government had set self-discipline of fiscal deficit for last five years, and this year was no exception. Contrary to the expectations it set a target of 3.3 % of GDP for the current year as against 3.4% indicated in the interim budget presented in the last February. Budget made it clear that the Government will start raising part of its gross borrowing from the external markets in external currencies. Riding on the healthy forex   kitty of beyond 425 USD and settled crude oil rates in the international markets and with the intent to control inflation this route will benefit the government.

The budget intends to kick-start domestic and foreign investment with focus shifting from ease of doing business to ease of living. Let’s look in what is in store for different segments as proposed in the budget.

Agriculture ‘Zero Budget Farming’: 

 With intent to save the farmers to carry out their occupation without getting trapped in a vicious cycle of debt, this budget proposes to rely on natural agricultural inputs with no chemicals.

Empowering women:

Making a reference to the 78 ladies members in the current the parliament Finance Minister Ms Seetaraman proposed that every member of Self Help Group having verified Jan Dhan account will get an overdraft facility of Rs 5,000 and opening doors for women’s entrepreneurial ability women can get a loan of Rs 100000.

Banking and allied sectors:

With several banks still under RBI’S PCA regime it was inevitable that capital starved banks would get the impetus.  This budget proposes that State-run banks would get Rs 70,000 crore capital to boost credit. Soon government will implement a tool to prevent unsolicited cash deposits in the bank accounts. The Union Budget emphasized about its intent to accelerate digitization in the economy. It has proposed to  incentivize  digital transactions by reduced merchant discount rates and has proposed to  levy 2 percent on cash withdrawals from bank accounts above a cumulative one crore per annum threshold . Finance Minister also announced rationalizing and streamlining of KYC (know your customer) norms for Foreign Portfolio Investors (FPIs) to make it investor-friendly and attract more funds. Besides that NRI portfolio route will be merged with FPI for seamless investment in stock markets. The proposed bill also requires SEBI to evaluate hiking minimum public shareholding to 35 percent from 25 percent which was one of the triggers for the market indices to fall post budget announcements. Encouraged with the successful launch of ETFs for disinvestments it is proposed to bring ETFs in line with equity-linked savings schemes of mutual funds to encourage retail investors. In a similar development it has been proposed to give relief to Securities Transaction Tax (STT) on exercise of options.

Non- Banking Finance Companies : Fundamentally starved with  so called liquidity  issues and plagued with insolvency and non-governance issues  getting this budget proposes to allow FIIs and FPIs investment in debt securities issued by NBFCs and the requirement of Debenture Reservation Reserve is done away with for NBFCs. Government intends to give one-time six-month partial credit guarantees to PSU banks for purchase of high-rated pooled assets of financially sound NBFCs amounting to Rs 1 lakh crore in the current financial year.

Transportation: Continuing with the Bharat Mala project it is proposed that states will be helped to develop roadways and 1,25,000 km of roads will be upgraded under Pradhan Gram Sadak Yojana under Phase III at estimated cost of Rs 80,250.

 Retail: Making a major change of stance it is proposed that Local sourcing norms to be eased for single-brand retail FDI.

Real estate: Finally RBI is going to act as a regulating authority of housing finance sector. Government intends to formulate a model tenancy law. It is proposed to  set up 1.95 crore houses under Pradhan Mantari Awas Yojna (Rural) and in order to boost affordable housing this budget offers additional tax deduction of Rs 1.50 lakh on interest paid on home loan (not second home) taken up to end of this financial year.

Governments decision of levying two rupees levy on diesel and petrol and increasing import duty on certain goods are shocking and inexplicable steps that shows that ,this government is following a legacy of its earlier regime and no different . Allocation on Healthcare and Education is still long way to go as compared with peers and if ease of living is to be achieved it has to walk the talk.

• UDAY TARDALKAR
  CORPORATE CONSULTANT AND TRAINER 
• Pc:google