How India Inc views Nirmala Sitharaman's #Budget2020

How India Inc view Nirmala Sitharaman's #Budget2020
Photo: Manorama

Indian Finance Minister Nirmala Sitharaman on Saturday announced significant changes in the income-tax regime, extended tax benefits for affordable housing and gave relief to companies on payment of dividend in the Union Budget for 2020-21 as the government looked to boost consumption to bring the economy out of the worst slowdown in 11 years.

The minister proposed raising customs duty on a variety of products ranging from tableware and kitchenware, electrical appliances to footwear, furniture, stationery and toys to give a level playing field to domestic companies and boost 'Make in India' scheme.

To boost growth, Sitharaman announced higher spendings on infrastructure, rural development and agri sector. The Finance Minister said the government is proposing a 16-point action plan to boost agriculture and farmers' welfare.

Agricultural services need copious investments, she said, adding the government has insured 6.11 crore farmers under the Pradhan Mantri Fasal Bima Yojna.

Here's how the Indian Inc have taken to the Budget:

George Alexander Muthoot, MD, Muthoot Finance:

George Muthoot
George Muthoot

"Budget 2020 plays the balancing act very well. The enhancement of a partial credit guarantee scheme for NBFCs is very encouraging for the sector as it addresses the liquidity issues. 

The thrust to create huge employment opportunities can be seen in the budget. Increased focus on MSME sector through favourable policies, allocation of Rs. 30,757 crore for J&K and Rs. 5,958 crore for Ladakh will benefit small businesses.

The extended tax benefit for affordable housing will benefit the lower and middle-income groups in the country thereby providing much-needed booster for affordable housing projects."

Rajnish Kumar, Chairman, State Bank of India:

Rajnish Kumar, Chairman, State Bank of India
Rajnish Kumar, Chairman, State Bank of India

“The Union Budget 2020 is an attempt to endow India with improved health and better access to education while unleashing a better infrastructure through better connectivity. The announcement of the new income tax scheme without exemptions is to move forward to a regime of a simplified and clutter-free direct taxation. The rural sector is the beneficiary of a larger outlay. 

The new export credit scheme is aimed at improving the credit flow for exporting units, mainly the MSME ones, as it will substantially reduce the collateral requirement as well as the overall interest burden of the ECGC regime.

The increase in deposit insurance limit from existing Rs 1 lakh to Rs 5 lakh was necessary. Introduction of simpler GST filing system from April 2020 is a welcome step and it will add further depth to the current GST regime. Simplified GST return for MSMEs will facilitate ease of compliance. Similarly, relaxation in the SARFAESI norms for NBFCs will lead to better recovery and borrower discipline in this sector.

Overall, the budget numbers are realistic and the staggered transition to a lower fiscal deficit is in perfect consonance with the growth objective.”

Abheek Barua, Chief Economist, HDFC Bank:

Abheek Barua, Chief Economist, HDFC
Abheek Barua, Chief Economist, HDFC

“The Budget provides credible numbers in terms of the fiscal math, recognising the revenue shortfall faced this year. It uses up the 50bps point leeway that the Fiscal Responsibility and Budgetary Management Act (FRBMA) provides.

The budget commits to increasing the expenditure by 13% in 2020-21 with increased allocations for education, health and certain schemes in the agricultural sector. That said, this expenditure increase, coupled with the income tax cuts, does not seem to suggest a large fiscal stimulus that the current slowdown perhaps warranted. Of course, the fiscal space to do that was limited, to begin with.  

Those who are disappointed with the absence of more overtures to the financial sector either in the form of more recapitalization resources for stressed public sector banks or a fiscal commitment to buy out the pile of toxic assets that continue to impede fund flow might draw some comfort from a measure that government will offer support by guaranteeing securities floated. While one needs to await the fine-print on how this will work and how quickly this will be implemented, this move might be helping in easing the logjam in the financial sector to some degree. Government guarantees could help cash-strapped NBFC borrow at lower rates. It could also enable the central bank to offer cash in exchange for these securities if it were to plump for some out of the box measures to attenuate risk aversion in the markets.

On a different note, the tax breaks offered to foreign investors and specifically those like sovereign wealth funds who are willing to place a long-term bet on the economy acknowledge the fact that there is a fundamental mismatch between the supply of domestic savings and capital needs for accelerated growth. This along with the abolishment of the Double Taxation Treaty is likely to help attract foreign fund flows.


For the bond market, the borrowing numbers seem to be broadly in line with market expectations and are unlikely to put significant pressure on yields in the short-term.”

Harsh Jain, Co-founder and COO, Groww:

"The government's decision to spend Rs 6000 cr on Bharat Net, to increase accessibility to the internet, will give a huge boost to internet-based companies - fintech being a prominent sector that will be benefited from the move. This will enable e-commerce and fintech companies, particularly the ones operating in the investment and lending domains, to serve customers in parts of the country that are not served by more traditional offline service providers and increase their footprint."

Indroneel Dutt, CFO, Cleartrip:

Tejas Express
Tejas Express

"The government has backed its vision to turn India into one of the world’s top tourism hubs by allocating Rs 2,500 crore for promoting tourism in general and setting aside a sum of Rs 3100 crore for the Culture Ministry to boost regional tourism. What would be wonderful is to have an empowered nodal body comprising of the Govt/OTA/airline, hotel and other industry representatives with the objective of promoting discoverability, ease of booking and fulfilment of our cultural, natural and heritage sites. 

Introduction of more Tejas Express type trains and the inauguration of several culturally-significant archaeological sites are other much-needed moves.

We also welcome the Hon’ble FM’s proposal to develop 100 more airports as well as the doubling of the airline fleet by 2024. This calls for skilled manpower development in parallel. The aim to double the fleet to 1200 in the next 3 years will certainly accelerate the passenger growth rate."

Yash Rane, Founder of Chizel:

“Budget 2020 looks promising from a startup point of view. Also, Reducing taxes will really help spending power of common man thereby increasing cash flow in the market. However, it does not address the slowdown in the market. We have not seen any aggressive measures that could promise USD 5T dream of Indian Economy.”

Tim Nicolle, Founder, PrimaDollar:

“The Finance Minister’s announcements introducing new schemes will help the small players in the export sector in a big way. The new Nirvik scheme introduces high insurance cover for exporters at a reduced premium. Simplified processes for faster claim settlements will be beneficial for both the exporters and the general insurers.It will lead to providing high insurance cover, reduction in premium for small exporters and simplified procedures for claim settlements, this will encourage export finance. This will boost exports. 

Coming to the MSMEs, the announcement for the subordinate debt for entrepreneurs is a big positive and will help the MSME sector benefit in a massive way. These seem to be sound measures that can stimulate profitable activities for players in the trade and finance sector.” 

Archit Gupta, Founder, and CEO, Cleartax:

"Firstly the deferment of ESOP taxation at the time of exercise is a very welcome move. This will help motivate and hire high-quality resources. The amendments to section 80IAC for relief to startups is lacklustre. This section has several conditions that need to be fulfilled and a lot of approvals built into it as eligibility criteria. The government needs to relax this more. Reduced compliances via single window for multiple compliances, reduced applicability of various Acts could really ease doing business in India and this will be more impactful."


However, not all have taken Nirmala Sitharaman #Budget2020 kindly. Trolls took to social media to vent their anger and confusion over the new optional Income Tax slabs. You can read about it here.

The comments posted here/below/in the given space are not on behalf of Onmanorama. The person posting the comment will be in sole ownership of its responsibility. According to the central government's IT rules, obscene or offensive statement made against a person, religion, community or nation is a punishable offense, and legal action would be taken against people who indulge in such activities.