Union Budget 2019-20: First Take

Budget 2019-20: Thoughtful schemes for middle class

The Budget had many announcements that could benefit the middle class income earners.

First and foremost, allowing people to use Aadhar in place of PAN number is a big move. It will potentially help in easy on-boarding of customers in financial markets as well as various digital platforms.

Second, affordable house buyers are being given tax incentives in the form of an additional tax benefit, if one buys a property before 31 March, 2020. This will not only help in reducing the EMI burden, it can also help a large pool of working people own their dream house. Allowing ETFs to qualify under Section 80 C is a good move for saving tax as well as giving one more choice to investors.

Support for startups

The Indian population being young, it is encouraging more and more entrepreneurs to emerge in India. The Budget has addressed the challenges faced by startup ventures by relaxing or clarifying tax ambiguity surrounding this segment. The big focus on startups in the Budget should naturally encourage people, specially youngsters, to look at this as one of the opportunities to build their future as well as the future of India.

The Budget thanked people who are genuine tax payers falling under the higher income bracket. However, this Budget did not hesitate to tax them more though they are already paying higher income tax . It appears to me that government has to achieve the right balance between income versus expenditure. The Finance Minister’s example of the elephant in a paddy field, drawn from the Tamil Sangam classic, Puranaooru, is really powerful to convey the meaning and the importance of paying tax. The Budget emphasised a number of measures to enable higher tax compliance.

Few of the administrative announcements such as bringing HFCs under the RBI fold is a great move. It will bring higher supervision and support from RBI and therefore, timely availability of funds for this sector. As a consequence, even banking related pain-points in this sector may also be addressed.

The Budget spoke a lot about the need for corporate bond market development to ensure availability of funds to all types of borrowers. While this has been the subject under discussion for more than two decades, it appears from the speech that it will get addressed this time around .

While the budget has given lots of emphasis on doubling our economy in the next five years, it has also kept the promise of fiscal discipline by keeping the fiscal deficit at 3.3%. This essentially means Government of India will increase focus on higher tax compliance, higher tax growth and different way of rising resources rather than funding growth through government borrowing.

Overall, the Budget has covered different needs of the country well, right from the infra development to consumption. It has also addressed some of the recent concerns around financial markets and created a road map for investment in manufacturing in the country through Foreign Portfolio Investors.

A. Balasubramanian, CEO, Aditya Birla Sun Life AMC

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Printable version | Jul 30, 2021 9:45:02 AM | https://www.thehindu.com/business/budget/budget-2019-20-thoughtful-schemes-for-middle-class/article28297946.ece

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