By Debanis Roy Chowdhury, Associate, COMPAD

The Union Budget 2020 is based on three themes - Aspirational India, economic development for all, and caring society. The Finance Minister said the fiscal deficit is estimated at 3.8 per cent (revised estimate for 2019-20) of the gross domestic product in the current financial year, and the government aims to lower it to 3.5 per cent (budget estimate for 2020-21) in the financial year ending March 2021. She proposed to allocate Rs 69,000 crore to the healthcare sector and Rs 12,300 crore to Prime Minister Narendra Modi's flagship cleanliness programme Swachh Bharat Mission. The Finance Minister also earmarked another Rs 3.6 lakh crore towards the supply of piped water to households. Here are the major takeaways from this year’s budget.

 Investment and Infrastructure:

• Govt plans to sell part of its holding in Life Insurance Corporation (LIC) by way of Initial Public Offering.
• Certain specified categories of government securities will be open fully for NRIs, apart from being open to domestic investors
• FPI limit in corporate bonds raised to 15% from 9%.
• Government doubles divestment target for the next fiscal year at Rupees 2.1 Lakh crores.
• Expand Exchange Traded Fund by floating a Debt ETF, consisting primarily of govt. securities.
• Rs.100 lakh crore to be invested on infrastructure over the next 5 years.
• National Infrastructure Pipeline:

o Rs. 103 lakh crore worth projects; launched on 31st December 2019.

o More than 6500 projects across sectors, to be classified as per their size and stage of development. 

• A National Logistics Policy to be released soon: 

o To clarify roles of the Union Government, State Governments and key regulators.

o A single window e-logistics market to be created

o Focus to be on generation of employment, skills and making MSMEs competitive.

• National Skill Development Agency to give special thrust to infrastructure-focused skill development opportunities.
• Project preparation facility for infrastructure projects proposed.

o To actively involve young engineers, management graduates and economists from Universities.

• Infrastructure agencies of the government to involve youth-power in start-ups.
• Rs.1.7 lakh crore proposed for transport infrastructure in 2020-21.

Highways:

Accelerated development of highways to be undertaken, including:

• 2500 Km access control highways.
• 9000 Km of economic corridors.
• 2000 Km of coastal and land port roads.
• 2000 Km of strategic highways.

Ports & Water-ways:

• Corporatizing at least one major port and its listing on stock exchanges to be considered.
• Governance framework keeping with global benchmarks needed for more efficient sea-ports.
• Economic activity along river banks to be energised as per Prime Minister’s Arth Ganga concept.

Airports:

• 100 more airports to be developed by 2024 to support Udaan scheme.
• Air fleet number expected to go up from present 600 to 1200 during this time.

Power:

• Rs.22,000 crore proposed for power and renewable energy sector in 2020-21.
• Expansion of national gas grid from the present 16200 km to 27000 km proposed.
• Further reforms to facilitate transparent price discovery and ease of transactions.

Infrastructure Financing

• Rs.103 lakh crore National Infrastructure Pipeline projects earlier announced.
• Rs 22,000 crore to cater to the equity support to Infrastructure Finance Companies such as IIFCL and a subsidiary of NIIF.
• IFSC, GIFT city: full of potential to become a centre of international finance as well as a centre for high end data processing:

o An International Bullion exchange(s) to be set up as an additional option for trade by global market participants with the approval of regulator.

• Rs. 27,300 crore allocated for 2020-21 for development and promotion of Industry and Commerce.
• Investment Clearance Cell proposed to be set up:

o To provide “end to end” facilitation and support.

o To work through a portal.

• Five new smart cities proposed to be developed.
• Scheme to encourage manufacture of mobile phones, electronic equipment and semi-conductor packaging proposed.
• National Technical Textiles Mission to be set up:

o With four-year implementation period from 2020-21 to 2023-24 at an estimated outlay of Rs 1480 crore. To position India as a global leader in Technical Textiles.

• Government has also allotted Rs 20,000 crore for renewable energy sector. 

Start-ups and MSME:

• Tax burden on employees due to tax on ESOPs to be deferred by five years or till they leave the company or when they sell, whichever is earliest.
• New Simplified return for GST from April 2020
• Start-ups with turnover up to Rs. 100 crore to enjoy 100% deduction for 3 consecutive assessment years out of 10 years.
• Turnover threshold for audit of MSMEs to be increased from Rs 1 crore to Rs 5 crore, to those businesses which carry out less than 5% of their business in cash.
• App-based invoice financing loans product to be launched, to obviate problem of delayed payments and cash flow mismatches for MSMEs.
• Amendments to be made to enable NBFCs to extend invoice financing to MSMEs
• Window for MSME’s debt restructuring by RBI to be extended by one year till March 31, 2021.
  • More than five lakh MSMEs have already been benefitted.
• An app-based invoice financing loans product for MSMEs to be launched.
  • To prevent the problem of delayed payments and consequential cash flows mismatches.
• Export promotion of MSMEs:
  • For selected sector such as pharmaceuticals, auto components and others.
  • An Rs 1000 crore scheme anchored by EXIM Bank together with SIDBI.
  • o Hand holding support for technology upgradations, R&D, business strategy etc.

Other Key takeaways:

Faceless appeals to be enabled by amending the Income Tax Act.

• Affordable housing:Central government proposed an outlay of ?27,300 crore for the development of industry and commerce during 2020-21.
  • Additional deduction up to Rs. 1.5 lakhs for interest paid on loans taken for an affordable house extended till 31st March, 2021.
  • Date of approval of affordable housing projects for availing tax holiday on profits earned by developers extended till 31st March, 2021.
• Union Budget 2020 provided an additional ?69,000 crore for the health sector.
• Finance Minister proposed to attach a medical college to a district hospital in PPP model.
• 80 billion rupees over five years to be provided for quantum technologies and applications.
• Debt Based Exchange Traded Fund expanded by a new Debt-ETF consisting primarily of Government Securities to give attractive access to retail investors, pension funds and long-term investors.
• Deepening Bond Market. Certain specified categories of Government securities to be opened fully for non -resident investors also.
• FPI limit in corporate bonds increased to 15% from 9% of its outstanding stock. 

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