With India still in the early stages of recovery from the coronavirus pandemic, the effort to push growth in the economy was visible in the union budget, a top corporate analyst has said.
Seasoned corporate analyst Deepak Talwar said that the Finance Minister shared the vision of a sustainable economy, by resting on six obvious sectors – Health & Wellbeing, Physical and Financial Capital & Infrastructure, Inclusive Development, Human Capital, Innovation and R&D, Minimum Government and Maximum Governance.
“However, the fiscal deficit reached as high as 9.5 percent of GDP, and government expenditure increased manifold to Rs 34.50 lakh crore vis a vis planned expenditure of Rs 30.42 lakh crore for FY 2020-21,” says Talwar.
“Interest rates will go high, and entrepreneurs will find it tough to get into the business. Prices of products will also rise. However, the government has been considerable enough to not come out with measures to compensate the fiscal treasury through any significant additional levies,” Deepak Talwar adds.
“A sharp jump in capital expenditure points to a firm medium-term push, but the onus of a delay in consolidation notwithstanding a cyclical recovery falls on the ability to finance the gap. As of now, the revenue burden is squarely on market borrowings, disinvestment, and indirect taxes (import tariffs and cess),” he says.
Talwar said that the government did well to clarify that advance tax liability in respect of dividend income was to be computed after declaration or payment of dividend, whichever is earlier, avoiding undue hardship to the taxpayer. “This will draw a positive reaction from investors because clarification around benefits under a tax treaty to be considered for withholding payments to FPIs is an important issue.”
He said that the ease of compliance and continuous investment towards digitisation has been the core of corporate tax proposals this Budget. “The faceless tax assessment scheme will work well for the government.”
He said that the direct tax ‘Vivad se Vishwas’ Scheme has helped reduce long-standing litigation to the tune of Rs 85,000 crore. “The announcement of a faceless dispute resolution committee for small taxpayers having taxable income of up to Rs 50 lakh and disputed income up to Rs 10 lakh is a welcome move,” Deepak Talwar adds.
India, which has the world’s second-highest coronavirus caseload after the United States, currently spends about 1% of GDP on health, among the lowest for any major economy.
“The finance minister has accorded special attention to the healthcare sector, increasing the overall outlay to health and wellbeing to nearly 2.25 trillion rupees, an increase of more than 135% over last year,” he says, adding the allocation of 350 billion rupees towards COVID-19 vaccination is also a very welcome step.
A seasoned corporate analyst Deepak Talwar is also an eminent serial entrepreneur with multi-decade experience across the industries.