India economic update

Milind S. Kothari

Managing Partner
BDO India
milindkothari@bdo.in

As is the convention for a new year to begin with hope and resolutions, the year 2020 is no different.  However, one would pray that it would not be a repeat of the last year , which for the Indian economy was one  fraught with challenges, and reluctantly accept that the slowdown is for real and needs an urgent fix.

With the annual budget day advanced to 01 February, the first month of the year is a time to take stock of the economy as a whole and debate the measures that the Hon’ble Finance Minister(FM) Nirmala Sitharaman should initiate to set the economy on the growth path.

But first the statistics; India’s GDP is slated to grow only at 4.8% this fiscal, the slowest since 2008-09. The growth projection for the next fiscal is also subdued at 5.8%, despite the claim that India’s economy in GDP terms is now the 5th largest in the world behind USA, China, Japan and Germany but ahead of the UK and France.

The headline inflation climbed to an alarming 7.35% in December 2019, much above the target rate of 6%. While the monetary policy may remain accommodative, the scope of further interest rate cut is nearly absent. With stimulus through this route becoming a non-option, the burden of reviving growth would shift to fiscal stimulus by defaulting on the FRBM (Fiscal Responsibility and Budget Management, an Act of parliament to contain fiscal deficit) target.

The story of infrastructure has been gathering momentum and played out in this Budget too. A report by the National Infrastructure Pipeline (NIP) outlined total requirement of investment of USD 1.47 trillion between 2020-2025 to deliver on 6,500 projects across the country. In the ensuing year, between the Centre, the States and the private sector, the plan is to invest nearly 1/5th of the promised outlay. However, the Budget support would only be a tenth  and with the private sector investment still hobbling when it comes to investing, a large burden will be left to the States to deliver  45%. The importance of delivering on infrastructure cannot be lost as it is critical for revival of the economy, arresting the slowdown, and  providing a partial answer to the looming problem of providing millions of jobs which is likely to become one of the biggest problem India would face.

Speaking about job creation, it may be worthy to take note of what has happened in the last 5 years that was promised but not delivered. The ‘Make in India’ initiative launched by the Prime Minister Mr. Narendra Modi in August 2014 to bring global manufacturing into India was by far the most structured and outcome-oriented policy initiative of this government. Central to this theme was welcoming foreign direct investment in India and rising in the rank on the ease of doing business on which India now ranks 63rd as released by the World Bank. The initiative was also to capitalise on the rising US-China trade tension that would compel manufacturing to shift out of China as a de-risking strategy. But, at best, the initiative is a work-in-progress. The share of manufacturing that was to climb to 25% of the GDP, still hovers a shade under 15% and is not likely to rise significantly in the next 2 years. The promise of jobs that this initiative was to deliver in numbers is far away. While Indian companies invested nearly USD 12bn outside India to tap into markets, technology and secure materials, the reverse is to yet happen in large numbers.

With the Annual Budget out and just about delivering on the ordinary, the answers to key questions such as revival of the economy, capping slowdown, providing jobs, continuing reforms and fixing the financial system will remain on top of the agenda through this year. In the background of noise with high decibels, what is lost is that India is ready for investment with the lowest tax rates in this region, one of the largest domestic market in the world and possibly the only talent surplus country with the highest population in the job-relevant age bracket.

There is so much to do to deliver on the hope and fulfil resolutions for this year. Indians need to wish themselves luck for the good days to come!

India economic update

M & A tracker

Rajesh Thakkar

Partner & Leader/ Transaction Tax
rajeshthakkar@bdo.in

M&A in India

Between November 2019 to January 2020, around 112 M&A deals were announced of which 55 M&A deals were completed. The aggregate value of deals announced was USD 4675.37mn; dominated by domestic deals (69) followed by cross border deals (43).

In terms of sectors (considering only closed deals), Materials sector saw the maximum deal value, with deals worth USD 207.30mn followed by Consumer Staples sector with deals worth USD 98.47mn and Information Technology sector with deals worth USD 62.24mn.

Significant Deals completed between November 2019 to January 2020

Target Company: Tata Chemicals Soda Ash Partners Holdings
Acquiring Company: Valley Holdings Inc.
Deal Value (in mn USD): 195
Sector: Materials

  • Tata Chemicals Limited, through its wholly-owned subsidiary Valley Holdings Inc. acquired a 25% stake in Tata Chemicals Soda Ash Partners Holdings from Andover Group Inc. for a consideration of USD 195mn (INR 13.83bn).
  • Tata Chemicals Soda Ash Partners Holdings is engaged in the mining and processing of trona ore and then selling the resulting finished product, soda ash.
  • The said transaction will enable Tata Chemicals Limited to have full ownership of the North American business and will further simplify its enterprise architecture.

Target Company: Tata Realty and Infrastructure Limited (Trilium Shopping Centre Portfolio)
Acquiring Company: Virtuous Retail South Asia Pte Limited
Deal Value (in mn USD):
98.19
Sector: Consumer Staples

  • Virtuous Retail South Asia Pte Limited (Virtuous Retail), through its affiliate Moribus Holdings Pte Limited, acquired the Trilium shopping centre portfolio from Tata Realty and Infrastructure Limited for USD 98.19mn (INR 7bn).
  • The portfolio includes Nagpur based TRIF Real Estate and Development Limited and Amritsar based TRIL Amritsar Projects Limited.
  • The acquisition is in line with Virtuous Retail’s pan-India expansion strategy. It would boost Virtuous Retail’s mall portfolio and expand its presence across both large and small cities.
  • Post transaction, Trilium shopping malls would operate under the ownership of Virtuous Retail.

Target Company: NowFloats Technologies Private Limited
Acquiring Company: Reliance Strategic Business Ventures Limited
Deal Value (in mn USD): 30
Sector: Information Technology

  • Reliance Strategic Business Ventures Limited (Reliance) acquired an 88% stake in NowFloats Technologies Private Limited (NowFloats) for USD 30mn (INR 2.12bn).
  • Reliance has also proposed to make an additional investment, subject to achieving agreed milestones which will increase Reliance’s shareholding to 89.66% stake in NowFloats. The additional investment is expected to be completed by December 2020.
  • It would further enable the Reliance group’s digital and new commerce initiatives.

Significant deals announced between November 2019 to January 2020 but are not completed

Target Company: Krishnapatnam Port Co. Limited
Acquiring Company: Adani Ports and Special Economic Zone Limited
Deal Value (in mn USD): 1,902
Sector: Industrials

  • Adani Ports and Special Economic Zone Limited (Adani Ports) is in the process of acquiring 75% stake in Krishnapatnam Port Co. Limited for USD 1.9bn (INR 135.72bn).
  • The purchase consideration will be funded through internal accruals and the existing cash balance of Adani Ports.
  • The said deal will take Adani Ports’s domestic market share to 27% from the existing 22% on a pan-India basis.
  • Post completion of the said transaction, Krishnapatnam Port Company Limited will operate as a subsidiary of Adani Ports.

Target Company: Decision Resources LLC
Acquiring Company: Clarivate Analytics Plc
Deal Value (in mn USD): 950
Sector: Health Care

  • Clarivate Analytics Plc is in the process of acquiring Decisions Resources LLC for USD 950mn (INR 67.17bn).
  • As a part of the transaction, PEL DRG Dutch HoldCo BV, a wholly owned subsidiary of Piramal Enterprises Limited, will sell its 100% stake in Decision Resources Group.
  • Piramal Enterprises Limited will sell its healthcare insights and analytics business to the US-based Clarivate Analytics Plc.
  • The said transaction will strengthen Piramal Enterprises Limited’s balance sheet and will mark another step towards significantly unlocking value in future.
M & A tracker

Feature story

Jiger Saiya

Partner & Leader/ Tax and Regulatory Services
BDO India
jigersaiya@bdo.in

Budget 2020 – Going for Growth

Global cues coupled with transformative measures like GST and demonetisation may have temporarily dampened India’s growth, but one cannot deny that India, with its structural reforms is heading to be the fastest growing economy once again. As the Indian economy is undertaking efforts to revive growth rate as estimated, the government presented its second budget of this term and first of the new decade, woven around the theme of ‘Aspirational India’, ‘Economic Development’ and ‘Caring Society’. In the longest ever Indian Budget speech, the Finance Minister(FM), Ms. Nirmala Sitharaman, stressed on boosting foreign investments, promoting entrepreneurial skills, improving effective tax administration and undertaking measures to enhance ease of doing business.. 

The government’s decision to cut corporate tax rates in the middle of the year had staged various expectations from other stakeholders of the society from Budget 2020. In order to boost investment in the equity market, the government has proposed abolishment of Dividend Distribution Tax (DDT) payable by the company. Dividends would now be taxed in the hands of the recipient shareholders. To augment debt investment, the government has extended the sunset date for lower With Holding Tax (WHT) rates on interest paid on foreign debts.

The government proposes to launch the ‘Vivad se Vishwas scheme’, an amnesty scheme targeted to reduce income tax litigation pending at various forums. The scheme would also provide a short window to settle disputes by merely paying tax, without paying any interest and penalties. The pleas of start-ups have been answered again by the government and the budget has provided the right impetus by increasing the turnover limit for eligible start-ups and enhancing the window to claim the 3 year tax holiday from a period of 7 years to 10 years, from its incorporation. For the first time ever, individual taxpayers will have an option to pay taxes by selecting a tax regime which is most tax efficient to them.

In order to counter the challenge of ‘global non-residents’ enjoying double non-taxation, radical amendments are proposed to the tax residency criteria for Indian citizens. The FM also stressed on the need for trust between the taxpayer and the tax administration. With the objective of enhancing efficiency of the delivery system of the Income tax administration, she promised to introduce a Taxpayer’s Charter, clearly enumerating rights of a taxpayer and eliminating tax harassment.

The FM also highlighted the impact of GST on households, resulting in savings amongst them. She proposed continuing GST reforms by introducing significant policy level changes; simplifying compliances; automating refunds; capturing critical information through digital means; using data analytics and AI tools to crackdown fraud, evasion and non-compliance. Further, she promised to review the existing Customs duty exemption by September 2020, which will help boost the domestic manufacturing industry. She clarified the government’s intent to review Rules of Origin to ensure that FTAs are aligned with the conscious policy direction.

The policy measures and the amendments proposed by the Budget reflect that the government does not cringe from taking strong and effective actions to bring the economy back in shape and back on the route to become a USD 05tn economy. Budget 2020 on the tax front may not have any populist announcements, but it is well balanced, focusing on continuing reforms, providing tax certainty and simplifying compliances.

With a plan well laid, efficiency in executing various propositions like that of e-appeals, Taxpayer’s Charter and amnesty schemes it is certain to bring back tax buoyancy. The government’s pragmatic and proactive approach will go a long way in reposing confidence of the stakeholders in the economy.

Feature story

Guest column

Dr.Sangita Reddy

President, FICCI


Budget 2020 empowering the India of tomorrow

The budget for 2020-21 was presented in an extremely difficult macro-economic backdrop. Growth has been slowing down, investments and consumption demand is tepid, the external sector is facing vulnerabilities on account of geo-political and geo-economic developments. To prime up the economy there was a need to use the limited fiscal levers available and do it judiciously.

FICCI is happy to note that through this budget the Finance Minister has managed to balance various objectives well. There is a lot in the budget to promote growth, yet, we have not let the fiscal numbers run astray. The budget strengthens the individuals, strengthens the industry and strengthens India as a whole. 

Expectations were high in the run up to the budget and people were looking for some big bang announcements. One has to be close to reality to appreciate what is feasible and acknowledge that it is not always the headline capturing measures that yield results, but a set of smaller measures that in aggregate give us better, greater and durable results. This is what Union Budget 2020-21 is all about. 

The Agriculture sector has got its due. A 16-point comprehensive program has been outlined. States that will play a crucial role have been incentivised to implement the model laws that will modernise agriculture and offer farmers new opportunities. 

On manufacturing, we saw renewed focus on promoting the domestic industry. Through an increase in customs duty, we have offered protection to our own firms against unfair competition. Labour intensive sectors that have faced the brunt of rising imports required this support. Of course, in the long run our focus has to be on improving the cost of doing business in India. Plus, we need to bring down the compliance burden on Indian industry. These are important if we have to realise the vision of Make in India and promote manufacturing in areas including technical textiles, electronics, medical devices, mobile phones etc. as highlighted in the budget. Dovetailing ‘Assemble in India’ with ‘Make in India’ can yield tremendous economic dividend if we our able to address some of the challenges faced by our manufacturing sector. 

Another major area that was focused upon in the budget was infrastructure. While the government has already announced a National Infrastructure Pipeline entailing an investment of USD 1.4tn over the next five years, the budget underscored priority areas and funds that would be committed for such development. Hundred more airports would be developed by 2024 to support the Udaan scheme. The government also plans to corporatize at least one major port and subsequently list it on the stock exchange. Five new smart cities will also be developed in PPP mode. The multiplier impact of these initiatives on growth and employment will be phenomenal.

Besides growth, another area which the budget touched upon well is employment – particularly for the youth. Whether through the Sagar Mitras program in the fisheries area or through offer of internships in Urban Local Bodies, the government has opened several new avenues for our youth to contribute to nation building. With an added focus on technologies of tomorrow such at AI, IoT, Big Data, our government is geared to provide the right skills that new age jobs demand. 

The sharp focus brought back on the disinvestment program and the announcement to list Life Insurance Corporation of India (LIC) on the stock market have underscored the reformist credentials of the government. We know that its resolve in this area will be tested, but this is a government which thinks differently and thinks boldly. 

Finally, for us at FICCI the biggest takeaway was the invocation of the importance of wealth creators in the society. This is extremely encouraging and should help build a positive environment for businesses in the country.

Guest column

India economic update

Milind S. Kothari

Managing Partner
BDO India
milindkothari@bdo.in
India economic update

M & A tracker

Rajesh Thakkar

Partner & Leader/ Transaction Tax
rajeshthakkar@bdo.in
M & A tracker

Feature story

Jiger Saiya

Partner and Leader/ Tax and Regulatory Services
BDO India
jigersaiya@bdo.in@bdo.in
Feature story

Guest column

Dr. Sangita Reddy

President, FICCI


Guest column
X

As is the convention for a new year to begin with hope and resolutions, the year 2020 is no different.  However, one would pray that it would not be a repeat of the last year , which for the Indian economy was one  fraught with challenges, and reluctantly accept that the slowdown is for real and needs an urgent fix.

With the annual budget day advanced to 01 February, the first month of the year is a time to take stock of the economy as a whole and debate the measures that the Hon’ble Finance Minister(FM) Nirmala Sitharaman should initiate to set the economy on the growth path.

But first the statistics; India’s GDP is slated to grow only at 4.8% this fiscal, the slowest since 2008-09. The growth projection for the next fiscal is also subdued at 5.8%, despite the claim that India’s economy in GDP terms is now the 5th largest in the world behind USA, China, Japan and Germany but ahead of the UK and France.

The headline inflation climbed to an alarming 7.35% in December 2019, much above the target rate of 6%. While the monetary policy may remain accommodative, the scope of further interest rate cut is nearly absent. With stimulus through this route becoming a non-option, the burden of reviving growth would shift to fiscal stimulus by defaulting on the FRBM (Fiscal Responsibility and Budget Management, an Act of parliament to contain fiscal deficit) target.

The story of infrastructure has been gathering momentum and played out in this Budget too. A report by the National Infrastructure Pipeline (NIP) outlined total requirement of investment of USD 1.47 trillion between 2020-2025 to deliver on 6,500 projects across the country. In the ensuing year, between the Centre, the States and the private sector, the plan is to invest nearly 1/5th of the promised outlay. However, the Budget support would only be a tenth  and with the private sector investment still hobbling when it comes to investing, a large burden will be left to the States to deliver  45%. The importance of delivering on infrastructure cannot be lost as it is critical for revival of the economy, arresting the slowdown, and  providing a partial answer to the looming problem of providing millions of jobs which is likely to become one of the biggest problem India would face.

Speaking about job creation, it may be worthy to take note of what has happened in the last 5 years that was promised but not delivered. The ‘Make in India’ initiative launched by the Prime Minister Mr. Narendra Modi in August 2014 to bring global manufacturing into India was by far the most structured and outcome-oriented policy initiative of this government. Central to this theme was welcoming foreign direct investment in India and rising in the rank on the ease of doing business on which India now ranks 63rd as released by the World Bank. The initiative was also to capitalise on the rising US-China trade tension that would compel manufacturing to shift out of China as a de-risking strategy. But, at best, the initiative is a work-in-progress. The share of manufacturing that was to climb to 25% of the GDP, still hovers a shade under 15% and is not likely to rise significantly in the next 2 years. The promise of jobs that this initiative was to deliver in numbers is far away. While Indian companies invested nearly USD 12bn outside India to tap into markets, technology and secure materials, the reverse is to yet happen in large numbers.

With the Annual Budget out and just about delivering on the ordinary, the answers to key questions such as revival of the economy, capping slowdown, providing jobs, continuing reforms and fixing the financial system will remain on top of the agenda through this year. In the background of noise with high decibels, what is lost is that India is ready for investment with the lowest tax rates in this region, one of the largest domestic market in the world and possibly the only talent surplus country with the highest population in the job-relevant age bracket.

There is so much to do to deliver on the hope and fulfil resolutions for this year. Indians need to wish themselves luck for the good days to come!

M&A in India

Between November 2019 to January 2020, around 112 M&A deals were announced of which 55 M&A deals were completed. The aggregate value of deals announced was USD 4675.37mn; dominated by domestic deals (69) followed by cross border deals (43).

In terms of sectors (considering only closed deals), Materials sector saw the maximum deal value, with deals worth USD 207.30mn followed by Consumer Staples sector with deals worth USD 98.47mn and Information Technology sector with deals worth USD 62.24mn.

Significant Deals completed between November 2019 to January 2020

Target Company: Tata Chemicals Soda Ash Partners Holdings
Acquiring Company: Valley Holdings Inc.
Deal Value (in mn USD): 195
Sector: Materials

  • Tata Chemicals Limited, through its wholly-owned subsidiary Valley Holdings Inc. acquired a 25% stake in Tata Chemicals Soda Ash Partners Holdings from Andover Group Inc. for a consideration of USD 195mn (INR 13.83bn).
  • Tata Chemicals Soda Ash Partners Holdings is engaged in the mining and processing of trona ore and then selling the resulting finished product, soda ash.
  • The said transaction will enable Tata Chemicals Limited to have full ownership of the North American business and will further simplify its enterprise architecture.

Target Company: Tata Realty and Infrastructure Limited (Trilium Shopping Centre Portfolio)
Acquiring Company: Virtuous Retail South Asia Pte Limited
Deal Value (in mn USD):
98.19
Sector: Consumer Staples

  • Virtuous Retail South Asia Pte Limited (Virtuous Retail), through its affiliate Moribus Holdings Pte Limited, acquired the Trilium shopping centre portfolio from Tata Realty and Infrastructure Limited for USD 98.19mn (INR 7bn).
  • The portfolio includes Nagpur based TRIF Real Estate and Development Limited and Amritsar based TRIL Amritsar Projects Limited.
  • The acquisition is in line with Virtuous Retail’s pan-India expansion strategy. It would boost Virtuous Retail’s mall portfolio and expand its presence across both large and small cities.
  • Post transaction, Trilium shopping malls would operate under the ownership of Virtuous Retail.

Target Company: NowFloats Technologies Private Limited
Acquiring Company: Reliance Strategic Business Ventures Limited
Deal Value (in mn USD): 30
Sector: Information Technology

  • Reliance Strategic Business Ventures Limited (Reliance) acquired an 88% stake in NowFloats Technologies Private Limited (NowFloats) for USD 30mn (INR 2.12bn).
  • Reliance has also proposed to make an additional investment, subject to achieving agreed milestones which will increase Reliance’s shareholding to 89.66% stake in NowFloats. The additional investment is expected to be completed by December 2020.
  • It would further enable the Reliance group’s digital and new commerce initiatives.

Significant deals announced between November 2019 to January 2020 but are not completed

Target Company: Krishnapatnam Port Co. Limited
Acquiring Company: Adani Ports and Special Economic Zone Limited
Deal Value (in mn USD): 1,902
Sector: Industrials

  • Adani Ports and Special Economic Zone Limited (Adani Ports) is in the process of acquiring 75% stake in Krishnapatnam Port Co. Limited for USD 1.9bn (INR 135.72bn).
  • The purchase consideration will be funded through internal accruals and the existing cash balance of Adani Ports.
  • The said deal will take Adani Ports’s domestic market share to 27% from the existing 22% on a pan-India basis.
  • Post completion of the said transaction, Krishnapatnam Port Company Limited will operate as a subsidiary of Adani Ports.

Target Company: Decision Resources LLC
Acquiring Company: Clarivate Analytics Plc
Deal Value (in mn USD): 950
Sector: Health Care

  • Clarivate Analytics Plc is in the process of acquiring Decisions Resources LLC for USD 950mn (INR 67.17bn).
  • As a part of the transaction, PEL DRG Dutch HoldCo BV, a wholly owned subsidiary of Piramal Enterprises Limited, will sell its 100% stake in Decision Resources Group.
  • Piramal Enterprises Limited will sell its healthcare insights and analytics business to the US-based Clarivate Analytics Plc.
  • The said transaction will strengthen Piramal Enterprises Limited’s balance sheet and will mark another step towards significantly unlocking value in future.

Budget 2020 – Going for Growth

Global cues coupled with transformative measures like GST and demonetisation may have temporarily dampened India’s growth, but one cannot deny that India, with its structural reforms is heading to be the fastest growing economy once again. As the Indian economy is undertaking efforts to revive growth rate as estimated, the government presented its second budget of this term and first of the new decade, woven around the theme of ‘Aspirational India’, ‘Economic Development’ and ‘Caring Society’. In the longest ever Indian Budget speech, the Finance Minister(FM), Ms. Nirmala Sitharaman, stressed on boosting foreign investments, promoting entrepreneurial skills, improving effective tax administration and undertaking measures to enhance ease of doing business.. 

The government’s decision to cut corporate tax rates in the middle of the year had staged various expectations from other stakeholders of the society from Budget 2020. In order to boost investment in the equity market, the government has proposed abolishment of Dividend Distribution Tax (DDT) payable by the company. Dividends would now be taxed in the hands of the recipient shareholders. To augment debt investment, the government has extended the sunset date for lower With Holding Tax (WHT) rates on interest paid on foreign debts.

The government proposes to launch the ‘Vivad se Vishwas scheme’, an amnesty scheme targeted to reduce income tax litigation pending at various forums. The scheme would also provide a short window to settle disputes by merely paying tax, without paying any interest and penalties. The pleas of start-ups have been answered again by the government and the budget has provided the right impetus by increasing the turnover limit for eligible start-ups and enhancing the window to claim the 3 year tax holiday from a period of 7 years to 10 years, from its incorporation. For the first time ever, individual taxpayers will have an option to pay taxes by selecting a tax regime which is most tax efficient to them.

In order to counter the challenge of ‘global non-residents’ enjoying double non-taxation, radical amendments are proposed to the tax residency criteria for Indian citizens. The FM also stressed on the need for trust between the taxpayer and the tax administration. With the objective of enhancing efficiency of the delivery system of the Income tax administration, she promised to introduce a Taxpayer’s Charter, clearly enumerating rights of a taxpayer and eliminating tax harassment.

The FM also highlighted the impact of GST on households, resulting in savings amongst them. She proposed continuing GST reforms by introducing significant policy level changes; simplifying compliances; automating refunds; capturing critical information through digital means; using data analytics and AI tools to crackdown fraud, evasion and non-compliance. Further, she promised to review the existing Customs duty exemption by September 2020, which will help boost the domestic manufacturing industry. She clarified the government’s intent to review Rules of Origin to ensure that FTAs are aligned with the conscious policy direction.

The policy measures and the amendments proposed by the Budget reflect that the government does not cringe from taking strong and effective actions to bring the economy back in shape and back on the route to become a USD 05tn economy. Budget 2020 on the tax front may not have any populist announcements, but it is well balanced, focusing on continuing reforms, providing tax certainty and simplifying compliances.

With a plan well laid, efficiency in executing various propositions like that of e-appeals, Taxpayer’s Charter and amnesty schemes it is certain to bring back tax buoyancy. The government’s pragmatic and proactive approach will go a long way in reposing confidence of the stakeholders in the economy.

Budget 2020 empowering the India of tomorrow

The budget for 2020-21 was presented in an extremely difficult macro-economic backdrop. Growth has been slowing down, investments and consumption demand is tepid, the external sector is facing vulnerabilities on account of geo-political and geo-economic developments. To prime up the economy there was a need to use the limited fiscal levers available and do it judiciously.

FICCI is happy to note that through this budget the Finance Minister has managed to balance various objectives well. There is a lot in the budget to promote growth, yet, we have not let the fiscal numbers run astray. The budget strengthens the individuals, strengthens the industry and strengthens India as a whole. 

Expectations were high in the run up to the budget and people were looking for some big bang announcements. One has to be close to reality to appreciate what is feasible and acknowledge that it is not always the headline capturing measures that yield results, but a set of smaller measures that in aggregate give us better, greater and durable results. This is what Union Budget 2020-21 is all about. 

The Agriculture sector has got its due. A 16-point comprehensive program has been outlined. States that will play a crucial role have been incentivised to implement the model laws that will modernise agriculture and offer farmers new opportunities. 

On manufacturing, we saw renewed focus on promoting the domestic industry. Through an increase in customs duty, we have offered protection to our own firms against unfair competition. Labour intensive sectors that have faced the brunt of rising imports required this support. Of course, in the long run our focus has to be on improving the cost of doing business in India. Plus, we need to bring down the compliance burden on Indian industry. These are important if we have to realise the vision of Make in India and promote manufacturing in areas including technical textiles, electronics, medical devices, mobile phones etc. as highlighted in the budget. Dovetailing ‘Assemble in India’ with ‘Make in India’ can yield tremendous economic dividend if we our able to address some of the challenges faced by our manufacturing sector. 

Another major area that was focused upon in the budget was infrastructure. While the government has already announced a National Infrastructure Pipeline entailing an investment of USD 1.4tn over the next five years, the budget underscored priority areas and funds that would be committed for such development. Hundred more airports would be developed by 2024 to support the Udaan scheme. The government also plans to corporatize at least one major port and subsequently list it on the stock exchange. Five new smart cities will also be developed in PPP mode. The multiplier impact of these initiatives on growth and employment will be phenomenal.

Besides growth, another area which the budget touched upon well is employment – particularly for the youth. Whether through the Sagar Mitras program in the fisheries area or through offer of internships in Urban Local Bodies, the government has opened several new avenues for our youth to contribute to nation building. With an added focus on technologies of tomorrow such at AI, IoT, Big Data, our government is geared to provide the right skills that new age jobs demand. 

The sharp focus brought back on the disinvestment program and the announcement to list Life Insurance Corporation of India (LIC) on the stock market have underscored the reformist credentials of the government. We know that its resolve in this area will be tested, but this is a government which thinks differently and thinks boldly. 

Finally, for us at FICCI the biggest takeaway was the invocation of the importance of wealth creators in the society. This is extremely encouraging and should help build a positive environment for businesses in the country.