Government in its Union Budget presented on Friday while envisioning India to become $5 trillion economy by 2025
New Delhi, July 5: The government in its Union Budget presented on Friday while envisioning India to become $5 trillion economy by 2025 also tried to touch upon every aspect like social issues, agriculture, women, FDI, housing for all among many other things. The industry stakeholders hailed the approach.
Finance Minister Nirmala Sitharaman in her maiden Budget speech said that public sector banks will now be provided Rs 70,000 crore capital to boost credit for a strong impetus to the economy.
“Budget is a popular budget without being populist. It has announced initiatives, which touch all segments of the society – women, youth, farmers, entrepreneurs, students and industry. It benefits both rural and urban India – all within the limited fiscal space available to it,” said Chandrajit Banerjee, Director General, CII.
Further commenting on it, Sandip Somany, President, FICCI said, “Directionally the budget is good, and it takes forward the plan that was laid out by the government during the Interim budget. There are several positives in the budget, and it provides a set of benefits for most segments of the society. We see a clear action plan for realising the vision of making India a $5 trillion economy over the next few years with a focus on ease of living.”
Banerjee said in line with the Economic Survey’s emphasis on investments for achieving 8% growth and employment generation, the budget has a host of measures for attracting investments. “These include investments in infrastructure, attracting foreign investments in hi-tech industries, sectoral focus on MRO, electric vehicles, tourism, MSMEs and policy reforms in the power sector.”
He said government’s intent to raise a greater part of its borrowing requirements internationally, will have a positive effect on government yields with a benign impact on interest rates. It will also reduce the crowding out effect of government borrowing, making more capital available for private investments.
Banerjee further said, that the measure to extend the 25% corporate tax rate to companies with an annual turnover of Rs 400 crore, from the current cap of Rs 250 crore, is an important policy signal towards government’s commitment to reduce corporate taxes. Reducing corporate tax rate has been one of the key recommendations of CII, to encourage the culture of risk capital in the country.
Sitharaman said NBFCs that are fundamentally sound would continue to receive funding from banks and mutual funds without being unduly risk averse. For purchase of high-rated pooled assets of financially sound NBFCs, amounting to a total of Rs 1 lakh crore during the current financial year, government will provide one time six months' partial credit guarantee to public sector banks for first loss of up to 10%.
“The NBFC sector has been in focus on account of the stress being faced due to liquidity crunch in the last few months. Acknowledging the important role played by NBFCs, some key measures have been taken, which would help ease the liquidity situation for the fundamentally sound NBFCs going ahead,” said Somany.
On the other hand, ASSOCHAM President B.K. Goenka said focus on affordable housing with higher tax benefits to end users, start-ups, sustainable development, and Make in India, is clearly visible, along with a firm assurance of ease of living for common citizens and businesses by the tax authorities.