Budget 2020 did not meet our expectations: Raghvendra Nath

By Raghvendra Nath

The Budget speech turned out to be no different from the previous years. The longest speech ever, the finance minister spent majority of the time describing the achievements of the government in the past and refused to acknowledge even once that the Indian Economy is facing a serious slowdown. There was widespread expectations that the budget would reduce personal Income tax in order to boost consumption. However, while the minister tinkered with the slab rates, she also qualified the reduction by removing all tax exemptions. To complicate further, now the individual can choose to pay taxes based on ‘Old rates with exemptions’ or ‘new rates without exemptions’. The outcome is that except gimmickry and confusion, the new changes are hardly going to move the needle of consumption. The only large and surprising measure in the budget was the partial disinvestment of LIC, the crown jewel of the government. This can lead to substantial money to the government and may also facilitate more transparency in one of the most opaque financial institutions of the country. Another significant measure is 100% tax exemption for sovereign wealth funds on their infrastructure investments. This should help in bringing more FDI in the long term in the infrastructure space. The new Direct Taxes complicate the situation more than they resolved and `would contribute a little surplus in the hands of the people. The DDT would provide additional relief to corporates but would be negative for the individuals as they would be subjected to nominal tax rate as applicable. So basically any hope that the budget would have in assisting the economic revival has been dashed out temporarily.

(The author is MD, Ladderup Wealth Management)