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FALLING SHORT OF ASPIRATIONS

Why in news?

Expectations from the Union Budget 2020 was that it would reverse the falling growth rate, reduce unemployment and rekindle the animal spirits needed to revive private investment.

Bonds and startups

  • The fundamental problem of infrastructure finance is the asset-liability mismatch which can be addressed only by developing a vibrant ‘corporate bond market.
  • However, the focus of the Budget is the multiple schemes for government bonds mainly through additional room for foreign portfolio investors and exchange traded funds in government bonds

Getting private investment

The Budget’s main growth plank is the hope for a deluge of private infrastructure investment through public-private partnership (PPP) and external sovereign wealth funds that have been given 100% tax exceptions in the Budget. But private investment depends on the cost of capital along with the certainty of returns.

Transportation infrastructure

  • The allocation of ₹1.7 lakh crore for transportation infrastructure is also a welcome step.
  • Everything depends on whether the money actually gets invested or remains unspent as it has happened in the current fiscal year

Social welfare schemes

  • Budgetary allocations for the Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) and the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) are disappointing.
  • The MGNREGA is allocated ₹61,500 crore, which is less than ₹71,000 crore for the current fiscal year

The abolition of dividend distribution tax, and the assurance that tax-related disputes will be considered with compassion might deliver the expected results provided these promises are fulfilled in letter and spirit

Will tax relief boost demand Economic slowdown Legacy IAS Academy Best IAS Academy in Bangalore
Economic Slowdown, Will tax cut boost demand?

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