Budget Insights: Top experts break down real impact of FM’s big moves

NEW DELHI: As Finance Minister Nirmala Sitharaman unveiled the Union Budget for financial year 2020-21, there were many announcements that were easy to digest and then there were those whose ramifications were not clear immediately. At ETMarkets.com, we had a panel of experts from diverse fields analyzing the real impact of these moves real time.

Here is how they did the hair-splitting of the Budget:

Budget Insights by Manoj Purohit, BDO India

“The proposal of providing FPIs an entry into debt financing of REITs and InvITs will open up a large source of fresh funding for infrastructure and real estate sectors. This will also open up a new avenue for FPIs to invest in a growing market like India.”
“Increase in FDI limits from 49% to 74% in the insurance sector is a welcome step and will help insurance companies raise funds to ensure their solvency is maintained in line with growing business needs. This will also augment foreign inflows and help attract more foreign companies.”

Budget Insights by Bijal Ajinkya, Khaitan & Co

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“One-person company will bring a more organized and regulated basis for smaller businesses. Limited liability itself may be a booster for such entrepreneurs.”
“GIFT IFSC will boost not only GIFT City but also the securities market.”
“With a view to encouraging foreign investment by sovereign funds in infrastructure sector, the conditions imposed will be reduced. A positive boost in the right direction.”

Budget Insights by Siddharth Srivastava, Khaitan & Co

“The reduction in reassessment period to 3 years will be seen as a very positive move by global investors and should greatly contribute to the advancement of India in Ease of Doing Business index.”
“One-person company will a big booster for startups.”
“Massive uptick in road infra on the expected lines. A lot of activity in this sector is likely in the coming year, including the award of new projects.”
“Enhanced debt participation for foreign investors in InVITs and other measures will be a welcome move and will enhance the depth of the debt market in India.”
“ARC will be set up to manage bad debt – basically bad bank will now become a reality. It will go a long way in resolving stressed assets in India.”

Budget Insights by Hemang Jani, Motilal Oswal

“Thrust of Budget is more on capex and to boost growth across key areas. This may entail a higher fiscal deficit of 9.5% in FY21 and 6.8% n FY22.”

Budget Insights by Rusmik Oza, Kotak Securities

“26% jump in govt capital expenditure (over FY21 RE) is very good for the economy.”

Budget Insights by Jiger Saiya, BDO India

“Relief to non-resident investors on dividend income will help reduce tax leakage on account of credit restricted in home country to rates prescribed under DTAA.”
“No extra spends announced to stimulate travel and tourism sector.”
“Proposal to decriminalise LLP Act and redefine small companies under Companies Act will help ease compliance and ease of doing business for smaller companies in India.”
“Voluntary vehicle scrappage policy will ensure much-needed booster to e-vehicles.”
“Proposal to set up ARC and AMC under the Stressed Asset Resolution plan, if implemented well, will transform the stressed assets space in India.”

Budget Insights by Gunjan Prabhakaran, BDO India

“Special focus on textile sector. In addition to PLI scheme, 7 more textile parks announced under mega Investment Textile Park scheme.”
“Increased FDI in insurance sector a welcome move.”
“Pre-filling of return details of salary income, tax payments, etc will result in greater transparency and help check tax evasion.”

Budget Insights by Sanjay Sanghvi, Khaitan & Co

“No TDS on dividend income very sensible announcement for recipients. Details need to be seen closely.”
“Reduction in period of limitation from current six years to three years is in line with countries like the US and will bring in the much-needed certainty in tax liability.”
“Faceless national Income Tax Appellate Tribunal path-breaking announcement. Details to be seen closely.”
“Reduced compliance burden much needed for business community. Timeline for reopening of tax assessment reduced to three years. Great move to ensure certainty in tax matters.”
“Overall hike in infra spend to be a big booster for the overall economy.”
“Focus on augmenting health infra is in line with pre-Budget expectations.”
“Significant increase for building health infrastructure is a big positive for pharma sector.”

Budget Insights by Rashmi Deshpande, Khaitan & Co

“Customs duties have been raised on raw material and inputs for many sectors, including MSMEs, agriculture, etc to ensure increase in domestic production.”
“More than 400 old exemptions on customs will be reviewed. This means customs duties could go up for many products.”
“Textile sector: Rationalization of duty by reducing BCD rates on specific inputs will boost the sector.”
“Solar energy: Inverters and lantern will attract higher customers duties to boost domestic production.”
“Rs 1.97 lakh crore towards production-linked scheme to boost manufacturing in India.”
“More technology use has helped better GST compliance.”

Budget Insights by Umesh Mehta, Samco Securities

“FM unveils voluntary auto scrappage policy. Negative for auto stocks. Expectations were too high. Auto as a sector will make a cyclical top for the time being.”