Extract from the Preface by Suhail Nathani, Managing Partner:
In the first budget, post the thumping victory in the elections, the Finance Minister has been rich on intent and has something to offer every constituency – from startups to NBFCs and everyone in between.
There are full marks for the path ahead – reform in FDI, ‘ease of living’ through ‘less government and maximum governance’, infusion of capital in the PSU banks, government guarantees for lending to NBFCs, strategic disinvestment and promise of several other reforms.
Even in the taxation realm, while there are increase in tax surcharges for those earning above 2 crores per year (clearly not welcomed by those already paying high taxes), 99.3% of corporates will see tax rates remain the same or reduced. The administration of tax is also reformed – most notably with a plan to reduce legacy litigation in indirect taxes breaking free from years of prolonged litigation and uncertainty. Specifically, on the direct tax front, the automated assessment process is notable in as much as interface with the administration is a huge point of pain for assessees. Hopefully, the use of technology here will only increase.
So, what is the biggest take away from this budget – it is not what it has delivered but what it promises to deliver! It is rich on intent, identifies sufficient strategic points to jump start growth and has big bang impact opportunities which will drive the economy – start-up ecosystem, borrowing in global markets, FDI reform, tweaking customs duty to benefit industries of the future such as electric vehicles and solar energy to ‘Make in India’, deep reform in education policy and labour laws, further investment in ‘Bharat mala’ (highways), ‘Sagar mala’ and ‘Jal marg vikas’ (waterways – coastal and inland), the building of ‘one nation-one grid’. The agenda for the future is firmly in sight.
From a beneficiary perspective, we have been here before. The real impact will come from the implementation of the intent. The Modi government came back into power in the belief that they are the right government to deliver results. Even though the markets have fallen 400 points in the immediate aftermath of the budget – voters have to wait 5 years to deliver their verdict. Hopefully, in the interim the government delivers on their promise. India needs it.
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