Budget 2020: What does India Inc expect from Nirmala Sitharaman?

NAREDCO National President Niranjan Hiranandani

"Indian economy has in place the blueprint to evolve into the magic number of $5 trillion but the upcoming Budget has more pressing and urgent issues which cry out for attention and remedial action. Real estate and urban infrastructure plays a crucial role in boosting the economy which calls for immediate support in terms of ease the liquidity crisis, boost rental housing and also rationalise personal and other forms of taxation," he said.

"Indian real estate sector expects a holistic solution rather than the piece-meal solutions that have been offered so far. The problem of liquidity is a complex one, what is needed is a resolution with execution speed so, there is a need for acceleration, and NAREDCO hopes that the Finance Minister does the needful in the upcoming Budget proposals."

Ashok Mohanani, Chairman EKTA World & Vice President NAREDCO Maharashtra

The real estate sector definitely needs a stimulus which the budget announcement can provide. Some of the key expectations from the government by the sector are to improve liquidity, balance fiscal discipline with stimulus, and expedite resolution of stressed projects, few of which are already underway. A resolution on the liquidity crunch and resolution of the NBFC crisis is crucial so providing the requisite incentives is expected. The sector also expects the government to reintroduce the subvention scheme as it will eventually result in favour of both buyers and developers. With the government’s goal for ‘Housing for all 2022’ the affordable housing is expected to flourish in 2020. To match with on-going price range in metros, it is imperative to increase the limit of affordable housing to 1 crore from the current cap of 45 lakhs or alternately increase the size limit to 60 sqmt from the current 30 sqmt. This will bring more projects and locations under the affordable ambit where a larger section of the population will be benefited. Apart from these, ensuring capital gains on par with shares to provide benefits to developers will help maintain the cash flow in the market.

In our opinion the 2020-21 budget is unlikely to mark a radical departure from past budgets. While a fiscal slippage this year seems inevitable, the government is likely to make every effort to attempt consolidation in 2020-21 to 3.4 to 3.5 per cent of GDP. The decision by the finance ministry taken on the 30th of December to cap government spending by different ministries in the last quarter (at a time where government spending seems critical to support growth) seems to us a clear indication of the government’s stance.  This means that that a major fiscal stimulus to ramp up growth is pretty much ruled out.

For the current fiscal year, we expect the fiscal deficit to breach the budgeted target by 20-30 bps, coming in at 3.5%-3.6% of GDP weighed down by lower direct, indirect (including GST) collections. In addition, lower than budgeted Nominal GDP to also be a pressure point. On the other hand, RBI dividend transfer and expenditure compression to provide some cushion to the Centre's finances.

Additional borrowings to be limited: The smaller quantum of fiscal slippage this year suggests that additional market borrowings are likely to be limited. As a result, we expect the upward pressure on bond yields to be contained. Moreover, OMO operations by the RBI are likely to support yields further. On the flipside, the high inflation prints over the coming months are likely put pressure on yields. On the balance, we expect the 10 year to trade in the range of 6.40%-6.60% by March-end. For next year, with a fiscal deficit target of 3.4%, we expect gross borrowings to be close to Rs. 7.7 trn.

FICCI

The central government should levy the peak income tax rate of 30 per cent on individual taxpayers earning over 20 lakh per annum, recommends the Federation of Indian Chambers of Commerce & Industry (FICCI). Currently, an individual earning over Rs 10 lakh per annum needs to pay 30 per cent tax rate. Citing that the income level on which peak income tax rate is applied in other countries is much higher than that in India, the industry body has said that there is a need to raise the income level on which the peak income tax rate would be applied. This would make income tax rates compatible with the international standards, FICCI stated in its ‘Focus areas for Union Budget 2020-21 – Taxation Issues’.

In its pre-Budget 2020-21 expectations, FICCI has also recommended revised tax slabs for individual taxpayers. The industry body has suggested that the central government should not impose income tax on individuals earning up to Rs 5 lakh per annum. A proposed 10 per cent income tax rate should be levied on individuals earning between Rs 5 to Rs 10 lakh per annum. A proposed 20 per cent income tax rate should be levied on individuals earning between Rs 10 to Rs 20 lakh per annum. The proposed peak income tax rate of 30 per cent should be applicable on individual earning over Rs 20 lakh per annum, FICCI said.

Big Boy Toyz Founder and MD Jatin Ahuja

"We are aware that there has been a downturn in the overall auto industry lately and the challenges have directly affected the mainstream luxury car industry. Thankfully, with our expansion drive opening more avenues at the right time, we can create excitement in the market despite these challenges. We had registered a growth of over 20% in 2019 and we expect to sustain this growth momentum in 2020 also. The pre-owned luxury car segment is eyeing 50% growth with this year’s Union Budget. We are also expecting the government to align its electric mobility vision with challenges faced by automakers and auto-dealers in terms of innovation and elasticity. The automobile sector is a crucial contributor in country’s GDP and so the government must take steps to ease the implementation of Bharat Stage VI norms which may lower the demand until the public fully understands the policies."

Rustom Kerawalla, Edupreneur, and Chairman Ampersand Group

Sharing his expectations from the upcoming Union Budget, Mr Rustom Kerawalla, Edupreneur and Chairman, Ampersand Group, said, "We hope that the Honourable Finance Minister will consider two significant changes in Union Budget 2020. The first one is to make GST applicable to school fees and other receivables of the school. In the current regime, GST credit for purchase of various materials and services is not being set off and becomes a cost which is passed on to the parents. The second important reform is to get the 'Education and related services' classified under the definition of priority sector lending. This change will enable the much needed access to lower interest rates, longer tenure of loans and other benefits for fueling the growth of Education sector in India in line with Agriculture, MSME and others."

Ankush Aggarwal, Founder of Avail Finance

“Fintech industry is playing an important role in the penetration of financial services with digitalization being the priority agenda for the government to enable financial empowerment across the country. Fintech startups are hoping the government to maintain the already lowered corporate tax rate which will help in terms of scaling up operations procedure and improving the forecasting of economic, financial and climatic phenomena by analyzing large data sets. We are also looking forward to reforms that bring in more transparency, advanced tools, and technologies with an aim to optimize processes to provide the end-user with a superior experience with greater convenience, engagement and enhanced security. The Reserve Bank of India’s recent announcement of video-based Know Your Customer (KYC) is a major relief to fintech startups and NBFCs by slashing down the costs significantly for companies targeting rural customers and millennials with the use of face-matching software and AI. We expect the Union Budget 2020 to introduce measures to ease working capital blockages, the introduction of better products and higher penetration of credit to reach a wider ecosystem in 2020.”

Vikram Kirloskar, President, Confederation of Indian Industry

The Confederation of Indian Industry has urged the Centre to converge multiple corporate tax rates to 15% by April 2023 without any exemptions and make the announcement in the Budget to facilitate investment decisions.

"The Union Budget could announce a roadmap for convergence of all corporate tax rates to 15 per cent, with no exemptions and incentives, by April 1, 2023. A signaling to this effect could help further boost investor sentiment and encourage investments," CII President Vikram Kirloskar said.