Expectations from Union Budget for FY2019-20

Author(s): 

"The budget is coming up with the proposed New Education Policy (currently at draft stage) in the background and hence allocation towards education will be closely watched. We think this the budget should draw from the point made in the NEP on achieving ‘foundational literacy and numeracy’ by 2025. It will be worthy to tie-in early digital literacy with this effort and therefore allocation towards ‘ICT in Education’ during Primary schooling should be strongly considered. Another area of focus should be the Continuous Professional Development (CPD) of teachers with its delivery through the Public Private Partnership (PPP) model. Budget allocation combined with minimum mandatory hours of CPD will help to upskill our large educator community.
Previous budgets have focused on skilling and vocational streams, and as an extension, the Government must have an outlay for English language teaching so that the employability quotient of our young workforce goes up. This has the potential to directly impact the country’s GDP. Education, being on the concurrent list, is a subject of interest to states as well and hence any new initiative must fit in well with the agenda that the respective State Department of Education (DoE’s) have to carry forward.”
-Sivaramakrishnan V, Managing Director, Oxford university Press

"During its last tenure, the Government had swiftly pushed several reforms which will eventually prove to be positive for the economy in the long run. The outlook on India's economic growth in the coming years looks very positive with the Government renewing its tenure for yet another time. The upcoming budget needs to be more attractive to foreign investors as it will be an ultimate platform to announce further incentives which will attract more foreign investments into the sector.
Considering the rupee's recent weak performance, this budget is an ideal time for reforms targeted at foreign inflows into India.
We expect the government to reduce the tax on interest income which will help accelerate capital inflows to India. Liberalizing foreign investment norms in real estate is another widely expected move.
Besides a few shortcomings, REITs as an investment tool is an asset for the entire real estate sector in India. Easing the taxation norms for REITs will benefit the entire sector by the large bandwidth of investors.
Real estate acts as a major growth driver for the Indian economy. The government must announce encouraging moves that can further attract foreign investments into the sector and help in huge employment generation."
-Sarojini Ahuja - VP, Sales & Marketing, Transcon Triumph

“1. Encouragement to R&D: R&D and product innovation are integral part of sustained exports. Unfortunately, India’s R&D spending is considerably low when compared to South Korea, Israel, Scandian countries, China, US, etc. R&D investment and product innovation, being long gestation activity with uncertainty, should be encouraged by providing 200% tax deduction.
2. Reduction in corporate tax: FDI inflows have soften up in recent times emanating from global uncertainties. FDI may be encouraged so as to bring technology and develop cluster based MSMEs in hub and spoke model. The reduction in corporate tax would be a step in that direction particularly when companies in US and China, facing the heat of tariff war, are looking for investment in India so as to produce both for domestic consumption and exports. The same has already been reduced to 25% for businesses having turnover up to Rs.250 Crore. The corporate tax reduction may be extended to all entities particularly as it will attract FDI also more so in view of the fact that US has reduced corporate tax from 35% to 21% in 2018 (Combined rate from 38.9 to 25.7%).
3. Fillip Domestic manufacturing: (i) The budget should encourage domestic manufacturing focusing on imports substitution as well. On Customs front, the instances of inverted duty structure needs to be looked into. More importantly, the end-use exemption for the domestic industry on inputs required for manufacturing of products imported through FTAs route should be given forthwith to push domestic manufacturing and imports substitution. (ii) Striking a balance between duty-free import of technology and level playing field to domestic capital goods industry is a tricky issue. However, the budget should look into reducing customs duty on capital goods which are not produced in the country so as to do justice with both entrepreneurs as well as domestic capital goods industry.
4. Export Development Fund for MSMEs: For MSME exporters, marketing and showcasing of their products require substantial expenditure. The current support extended through various scheme is grossly inadequate. We require an export development fund with a corpus of 0.5% of export value so that MSMEs aggressively participates in international exhibitions and trade shows.
5. Employment / Investment linked Benefits: Creation of employment is the biggest challenge faced by the country. If we have to reap demographic dividends, we have to provide jobs to millions who are seeking the same on month-on-month basis. We would urge the Government to provide income tax relief to units which provide additional employment in export sector. Such a Scheme will also help the workers to move from informal employment to formal employment, which is a priority of the Government. Incentives may be provided based on twin criteria of incremental growth in exports and incremental growth in workers so that while on the one hand exports is increased, on the other, the employment intensive units also get a boost. Other option is to provide investment linked tax deductions so that units are encouraged to go for expansion helping exports and job creation.
6. Tax Deduction on Export Marketing Expenses etc.: Indian exports suffer from numerous disabilities including infrastructure bottlenecks, high transaction cost, high cost of credit, etc. The cost of overseas marketing including market survey, market entry, promotions, road shows, participation in trade fairs/exhibitions is also very high. To encourage companies to invest in exports marketing for expanding exports as well as better unit realization, the budget should provide 150% weighted deductions on the expenditure incurred on exports marketing. Singapore has a “Market Readiness Assistance” (MRA) grant for companies with less than S$ 100 million annually for marketing related expenses. The MRA grant offers funding equal to 70% of the cost on such activities to encourage companies to go for overseas marketing/exports.
7. Higher Budget Allocation to Department of Commerce: The share of exports in country’s GDP has declined in last few years. If GDP has to grow at 8% plus, Exports should grow at 15% plus. DoC should be given enough budget allocation to support exports including agri exports which has come in focus only recently.”
- Sharad Kumar Saraf, President, FIEO

"With podcasting industry gearing up for a transformational year with the convergence of media, technology and telecom industries coupled with the government’s vision to further accelerate the Digital India program, most experts also support that the Budget 2019 will only help to streamline this transition more positively. This industry is also expected to grow in conjunction with an increase in smartphone user base, provided Ms. Seetharaman continues with her pinpointed focus on digitization.
The Budget is also set to help the innovators in this industry as the government looks towards scaling up digitization across all industries that touch a common person’s life and concerns their needs. We are also hopeful that this will prioritize the growth in the domestic purchasing parity of consumers and build their confidence towards discretionary purchases towards content. This will also boost ad revenues, and the introduction of premium subscription models, as exists in a lot of players for the VOD and AOD space."
- Gautam Raj Anand, Founder and CEO, Hubhopper (India's largest podcasting and AOD platform)

“This year’s budget is expected to boost the number of smartphone users and e-commerce firms. With more women in tier 3 and tier 4 towns opting for shopping online and high amount of rural spending, lies a huge scope for FMCG and menstrual hygiene brands in small towns. Additionally, a few legislations on this phenomenon can help with providing access to products which are a necessity for women. Small towns like Patna, Jharkhand, Uttarakhand and Ambala are likely to witness the transformation of kirana shops into online stores.”
-Gauri Singhal, Founder and CEO, Visionaari (parent company of FLOH tampons)

"The Real estate sector is the 2nd largest employment generator, which is set to contribute close to 13% of the country’s GDP going forward.
In the back of several positive developments in the right direction, it is imperative to address some of the gaps with key focus areas in the upcoming budget:
Successful implementation of RERA (Real Estate (Regulation & Development) Act) in all states, ensuring accountability from all stakeholders concerned.
Public participation is key to the growth of infrastructure for future. The Government should create awareness among the masses on the need for better infrastructure, even if it means the Pay to use model.
Ease the liquidity crunch for making funds more accessible to home buyers and consumers, which will again boost Indian real estate sector.
Developers need to seek on an average of 25 approvals for each project which increases project timelines, delivery and the cost significantly. A simplified online approval process with a single window clearance will speed up the process and benefit the sector.
Adoption of digital technology will increase transparency and help boost the confidence of global investors in the Indian Real Estate sector. Both government and private parties need to implement the key attributes of block-chain technology to modernize real property conveyance and improve processes for recording deeds and other related instruments.
There should be a robust government mechanism which can address issues such as hoarders, black marketers and sand mafia or else cartels will be detrimental to the future of the construction sector.
The much awaited “Industry Status” will simplify the approval process, attract equity investment, improve transparency among other large impetus providing measures to the booming Real Estate sector in the country."
-Reeza Sebastian, President, Residential Business, Embassy Group

"We are hoping that the upcoming budget will emphasize on housing sector. More tax sops and higher relief on the home loan rates will woo the homebuyers and investors to buy property. This can help the sector recover from its liquidity woes to a larger extent.
Timely start & completion of projects has always been a concern, and a single window clearance will help to swiftly execute projects making it a win-win situation for developers and homebuyers. Industry status for the sector and single window clearance for projects has been a long-standing demand which we expect the new Government to address.
We would also like to revive the input tax credit under new GST regime which will help to keep the property prices under control.
While incentives have been provided to boost the affordable housing segment, there needs to be a reduction in the cost of land, development premiums to incentivize developers to build budget homes. Additionally, interest rates on housing loans should be reduced to benefit a broader segment of homebuyers and increase demand. The Government also needs to allocate more funds for Pradhan Mantri Awas Yojana (PMAY) which will help them achieve the target of ‘Housing for All by 2022’.
Apart from this, we are expecting a more determined infrastructure push from the Government not only in the form of more funds but with strict guidelines on actual infra deployment. This will certainly boost the real estate sector and also generate more jobs that the Government had committed to deploy."
-Navin Makhija, Managing Director, The Wadhwa Group

"This Budget will essentially send out the feelers and first signals of what the Modi2.0 government’s economic agendas are.
As with any budget the Industry expects some stimulus to turn the economic wheels faster. Revival of 80IB , GST revisions and facilitating better credit opportunities from Banks and NBFCs are some expectations of the Real Estate Developer fraternity.
On the Hospitality front again, the GST rates on semi luxury properties should be revised and stimulus to develop asset heavy properties are need of the hour.
The Finance Minister needs to show her awareness about the business scenarios at the ground level. She has to strike a balance between improving ease of doing business of MSMEs as well as give reasons to cheer for the Public at large. It will be interesting to see how this balance is maintained."
-Rishi Jain, Managing Director, Jain Group

"With a second term through a resounding mandate, we expect the Modi Government to focus the budget around reforms that will be critical to drive long term economic growth. Land reforms, micro housing development, rural town development projects and special sops for agri and allied industries are some of the key areas we expect will give new impetus to the budget.
We also expect the budget to provide, the much anticipated tax relief through changes in personal income tax for the middle income household to perk up consumption."
-PN Vasudevan, CEO and MD, Equitas Small Finance Bank

"During its first term, the Modi government had introduced major reforms such as Demonetization, RERA, GST, Benami Transactions (Prohibition) Act, etc in order to support the real estate sector. The expectations are quite high this time, too, as the government will present its first budget after winning with a thumping majority in the recently concluded Lok Sabha elections.
In the past few months, the NBFC crisis has spread its wings in almost all the sectors including real estate. The government needs to take fiscal measures to address the deteriorating NBFC liquidity crisis. If the crisis is not dealt with soon, it will impact the recovery of the real estate sector.
A reform that has been long due is granting the industry status to the real estate sector for a proper overhaul. This move will complement the government’s recent initiatives to bring structure to the industry.
Although the GST for under construction flats and affordable housing has been reduced to 5% and 1% respectively; the input tax credit is hitting the margins of the developers eventually resulting into higher prices for the home buyers. This needs to be addressed soon by the Government.
The government should also focus on infrastructure development as it will drive real estate demand. Increasing the allocated expenditure for infra projects will eventually boost the residential and commercial markets and promote the government's plan to create smart cities.
We hope for a budget that is conducive and propels the growth of the economy, boosts the real estate sector, benefits the home buyers and provides relief to the developer community."
-Rajat Rastogi, Executive Director, Runwal Group

“The Automobile industry needs support from the Government in this year’s union budget as the auto sector is facing one of its most challenging periods in the last few years. Auto sales are at an 18 year low and slowdown in the automobile industry is affecting the overall GDP growth story as it contributes over 7% in the total GDP. We expect that this union budget should provide much needed relief to the sector with initiatives & policy interventions which can revive the sector.
I feel GST on automobiles should be reduced from 28% to more rational level of 18% as this will absorb some of the cost impact of the future introduction of BS VI at and this will add to affordability for the customer & be an impetus to growth.
A comprehensive policy on the scrapping of old vehicles will not only benefit emission aspects but will in addition help the auto sector & consumers with new technology vehicles. As far as electric vehicles are concerned we are looking forward to comprehensive policy on the phased introduction of EVs in India.
Auto industry in general has been a great source of opportunities for investments and direct and indirect employment and currently this industry needs the appropriate support of the government to ensure it comes back to the growth trajectory & continues its contribution to the GDP & the India growth story. I feel government recognizes the potential of the auto industry and it will put its best foot forward.”
-Diego Graffi- MD & CEO Piaggio Vehicles Pvt. Ltd.

“Reforms like RERA, GST, Insolvency & Bankruptcy Code, together with the first REIT issuance have been a positive for the organized real estate players. We now look forward to some more prudent steps by the re-elected government to encourage home buyers. As the nation undergoes rapid urbanization, it is imperative for the government to focus on the liquidity crunch, land availability, rationalisation of GST with input tax credit benefit and more tax exemptions for the salaried class in the forthcoming budget. A structured approach on reforming the policy framework and taking corrective measures to resolve industry issues, will further enhance India's position in the Ease of Doing Business rank and making it an attractive investment destination.”
-Vikas Oberoi, CMD, Oberoi Realty

"With a second term through a resounding mandate, we expect the Modi Government to focus the budget around reforms that will be critical to drive long term economic growth. Land reforms, micro housing development, rural town development projects and special sops for agri and allied industries are some of the key areas we expect will give new impetus to the budget. We also expect the budget to provide, the much anticipated tax relief through changes in personal income tax for the middle income household to perk up consumption."
-PN Vasudevan, CEO and MD, Equitas Small Finance Bank

“Given the favourable outcome of GST in terms of rising revenue, we wish the Government would reconsider the rationalization of GST rates for cars which currently attracts 28% GST and 17-22% Compensation Cess. We recommend a downward revision of GST rate on all cars from to 18% from 28% and a proportionate reduction of CESS to around 15% for all cars above 4 meters. This will act as a much needed catalyst for growth of the industry, especially when it is facing subdued customer interest due to multiple factors like rise in insurance costs, inflationary hikes, liquidity crunch and forthcoming price increase due to BSVI implementation. To revive the slowing down auto sector, we also recommend to consider offering ‘depreciation’ benefit on vehicles to individuals.”
-Martin Schwenk – MD & CEO – Mercedes-Benz India

“India is poised to become a $5 trillion economy in the next five years and is aspiring to reach $10 trillion in the next eight years thereafter. We have witnessed a wave of next-generation structural reforms from the government, which are gradually driving efficiency in the entire logistics ecosystem and have set the stage for decades of high growth. There is a considerable push from the Ministry for the implementation of the draft National Logistics Policy to bring down India's logistics costs from the current 14 percent of the gross domestic product (GDP) to 9 percent.
Assigning an infrastructure status to the logistics industry was a significant decision taken by the government. The need of the hour is to enable a policy framework to facilitate trade and growth of the sector. With impetus on improving infrastructure and facilitating trade, tax incentives or subsidies from the government on warehouses will give it a further boost since logistics requires large investments which yield returns only in the long term.
We urge the Ministry to also include Aviation turbine fuel (ATF) under GST for cargo airlines as each state has different tax rates because of which the refueling cost fluctuates from region to region. Another key area to be considered is the revision of corporate tax rates as a tax relief to corporates will auger well in boosting investments as well as corporate earnings.
While there has been a huge focus on simplifying the e-way bill (EWB), there should be a further modification in the EWB generation system. The onus should shift from the transporter to the shipper as they have complete control on the content of the shipment. This will not only ensure that the right EWB is being generated but also impact the transit time positively as time bound delivery is a critical aspect in the express business industry.
Digitization requires further thrust especially digital payments to aid higher compliance ratio. Technology and automation are the key drivers of business in the logistics space, thus further impetus should be given to higher adoption and integration of systems to enable seamless business transactions.”
- Aneel Gambhir, CFO, Blue Dart

"While the upcoming Budget is crucial for all sectors, it is pivotal for the education sector. We expect that a substantial amount would be set aside to the education sector so that we can lay a stronger foundation for new-age learning strategies. For any country, the most significant returns are those garnered from investments made in its children. Hence education is a critical sector and the budget needs to improve the standards of learning. The quality of teaching and the learning ecosystem needs significant improvement to enable students to perform at their expected levels. The current allocation for education is less than 3% of the GDP, which is low compared to developed countries where it is usually ranges between 5% and 7% of the GDP. Teacher training is important to develop and build capacity for addressing the current learning needs. There is need for Improving facilities in institutions through setting up smart classrooms, modern laboratories, research facilities and libraries which would enhance the quality of learning. Hence the government must emphasize on education at all levels. We also expect government to improve the quality and scale of education across the country through a continued digital push."
-Niru Agarwal, Trustee, Greenwood High International School

"In February 2019, the Government revised the budgetary expenditure and allocation of Mid-Day Meal (MDM) Scheme from ₹10,500 Cr to ₹12,054 Cr. It was a welcome move, highlighting the Government’s intent and commitment to the welfare and development of the children of our country. Akshaya Patra appreciates the Government’s annual work plan and measures adopted to reform the programme.
We request the Government to allocate funds for improving the school infrastructure to ensure hygienic and healthy school environment, improved meal experience, clean hand wash and sanitation facilities, and an overall positive learning environment. We urge the Government to focus on the convergence of drinking and potable water schemes of the Jal Shakti Ministry with the Mid-Day Meal Programme by earmarking the budget for the scheme.
We also request to the Government to consider budgetary allocations for monitoring the growth and development of all the children in Primary and Upper Primary Schools and set up a parallel linkage with the National Health Mission in cases of referrals. We are also hopeful that the MDM Programme will be aligned with the parameters of POSHAN Abhiyan to address child malnutrition using various interventions.
We also appeal to the Government to make budgetary allocation for extending the coverage of MDM Programme to children studying in classes 9th and 10th in Government and Government-aided schools to ensure continuum care to all school-going children in the country.
With such investments, we as a nation will be in a better position to achieve the food, nutrition, health and education outcomes of the mid-day meal initiative and boost child welfare and education.
We would like to reiterate our commitment to the Government’s initiatives aimed at the holistic growth and development of children. We will continue to offer our services and assistance in the implementation of these initiatives.:
-Shridhar Venkat, CEO, The Akshaya Patra Foundation

"We expect budget to be progressive to revive the economy and create positive business sentiments. It should usher in policies that will help in the growth of the overall economy by providing fillip through a boost in consumption. We await a forward-looking budget that would act as a catalyst for higher demands and spur spending across bottom-of-pyramid consumers as well as lower middle class consumers.
Given the widespread poverty levels in India, education needs to play a critical role in bringing about a change across generations with primary public education standing out as the most important area of focus. The upcoming budget needs to take initiatives such as allocating bigger spending on education and push digitalisation in the education sector. It should also look at removing some hurdles in opening schools and higher education institutions in the country and the whole process can be made easier so that we can see more private sector investment flowing in the education sector.
We also expect government to take care of the issues faced by the housing sector and address them systematically to fulfil the mission of “Housing for All by 2022”.
Overall, we feel that the measures should meet the expectations of the common man, which will lead to higher consumption, enhanced liquidity in the market, increase in investment and savings, imperative to fuel India’s growth engine."
-Shweta Sastri, Managing Director, Canadian International School, Bengaluru

“There has been significant rise in the price of maize in the country which is directly affecting livestock feed market. The maize price had been on all-time high in range of Rs. 23 and refuse to cool down even during harvesting time.
There are many reasons that have contributed to this hike like droughts in several states, fall army worm that have destroyed crops in Maharashtra and Karnataka.
Moreover, a 5% GST has been imposed on raw materials such as Soya DOC, Rice Bran and MBM essentials. All these factors are affecting the industry significantly. There is 7-8% deficit in the production of maize in domestic market.
Hence it is suggested that an import of 1 million MT can help meet the shortfall and cool down price in short term. However, government should take measures to meet the demands of the industry and provide some relief from the situation. The Import of maize should be allowed duty free this year to provide relief to farming sector reeling under abnormally high maize prices.
Further to boost the sector, government should also invest in and undertake programs that will help in creating awareness among farmers on how to use modern feed and farming techniques which in turn will help Aqua farmers in earning more profit. Policies should also be undertaken that will help farmers access the much-needed capital. The Kisan Credit Cards should also be handed out at a faster rate so the farmers can access this capital to help them grow further.”
-Amit Saraogi, MD, Anmol Feeds Pvt. Ltd.

“Attention has to be more on Startups as besides creating more job opportunities, startups are also focused on digitalization. Need of the hour is to strengthen Startup businesses thus it is important for the budget to pay attention to more & more cities with start-up ecosystems."
Currently most startups are operating in Bengaluru due to the environment & culture which is missing at other places. Though few more cities like Gurgaon, Pune, Hyderabad have started focusing on startups but still the count is very low and the pace is slow. In order to have more startups, it is important to have at-least 10-12 Start-up Cities across the country which can be done by providing the right environment, resources, infrastructure, support services, government policies etc to start ups. This is important as more jobs will get created across the country and will not be limited to few cities like today.
As the government is also trying to make the payments' mechanism in digital mode, recently they have permitted SMEs to pay 5% income tax if all their transactions are done digitally, if not done digitally, the income tax is 8 %. As government is keen to to promote digitalization, thus it is even more important to hand hold startups.”
-K S Bhatia, Co-Founder of Pumpkart, India

Date: 
Tuesday, July 2, 2019