JOIN USNirmala Sitharaman goes pro-people in Budget 2020: Abhinav Angirish
By Abhinav Angirish
Sitharaman presents an all-inclusive and visionary budget laying down the roadmap to make India a $5 trillion economy by 2025. The budget extensively focused on reviving agriculture by increasing target for agriculture credit to a whopping 15 lakh crore. This is highest target for agricultural loans. It should be noted that in the past six quarters the economy has witnessed sharp slum, from 8.1 percent in 2018 to 4.5 percent in 2019.
In a bid to boost consumption, the Finance Minister introduced simple yet revolutionary tax slabs, aimed at providing relief to the common man.
The new effective tax-slabs are:
Income between
1) Rs 5 to 7.5 lakh tax reduced from 20% to 10%
2) Rs 7.5 to 10 lakh tax reduced from 20% to 15%
3) Rs 10 to 12.5 lakh reduced from 30% to 20%
Rs 12.5 to 15 lakh reduced from 30% to 25%
This effectively means that a person earning Rs 5 lakh annually has no tax burden. This also means that a person earning Rs 15 lakh per annum will pay Rs. 1.95 lakh instead of Rs. 2.73 lakh without deductions. The Finance Minister reiterated her commitment to simplify the tax regime, and proposed tax charter to protect individuals from harassment.
In a bid to boost infrastructure, the budget proposed 100 percent tax concession to sovereign wealth funds on investment in infra projects. There were high hopes for housing, but the Finance Minister choose to maintain status quo. The budget can as best be described as pro-people, besides providing tax relief to common man, the FM also increased insurance cover for bank deposits from Rs 1 lakh to Rs 5 lakh. This was long standing demand of a common man who seemed helpless in the wake of PMC bank fiasco.
Surprisingly, the FM was silent on divestment. The listing of LIC can be termed as a bold decision, more focus was required on divestment.
The markets reacted violently in the absence of LTCG tax removal and benchmark BSE Sensex tanked more than 1000 points in the trade. The only consolation for markets seems to be the government’s commitment to maintain fiscal deficit at 3.5% of GDP. However, the markets are expected to recover soon as soon as the effects of budget sink in.
Overall, the budget can be termed as progressive and pro-people. Government has provided a stimulus to the economy in the form reduction in personal taxes.
(The author is Founder at Investonline.in)