Home / Budget 2019 / News /  Budget 2020 balances aspirational growth with fiscal prudence

This budget came at a pivotal time for India. In the run-up to the budget, we have been hearing data that is worrisome about the state of India’s economy – especially GDP, where we have been struggling to achieve 5%, and high level of unemployment. Against that backdrop, this budget was seen as a chance for the government to respond to the economic indicators with clarity and decisiveness.

It is not easy in a country as large as India to turn the levers that will revive the economy easily, but the Finance Minister managed to include some very effective levers in her speech.

The budget had some attractive features for foreign investors – starting with the abolition of the Dividend Distribution Tax, the tax benefits to sovereign wealth funds that invest in infrastructure, and the increase in limits from 9% to 12% for FPIs in corporate bonds. These measures should signal to the foreign investor community that the government is keen for foreign investment to come to India. Especially in the infrastructure sector, this should make a difference.

FDI and ECBs were also opened up in the education sector. This was quite a remarkable move, and will set the foundation for Indian educational institutions to benchmark themselves against world-class standards.

The target on disinvestment was almost doubled to 2.1 lakh crores, fuelled by the announcement of an IPO from LIC. While this mechanism could have unlocked even more companies, LIC would possibly be just the start of other divestments.

The announcements on personal income tax were welcome, especially for the workforce in various corporates, including ours, who now will have an option to optimise their taxes. If executed well, this measure will unlock purchasing power in the hands of the middle class, and they will then have opportunities to spend their money meaningfully, perhaps even on their health and wellness.

As far as the health sector itself was concerned, there were two announcements that signalled the government’s intent to deliver health for all. Firstly, the offer that there would be viability gap funding (VGF) for establishing hospitals in under-served districts. Several private providers would be willing and able to partner in this. Secondly, the government took notice of the severe shortage of doctors and allowed for the attachment of Medical Colleges to district hospitals, along with VGF.

As a corporate house which has been continuously engaged with the policy-makers on these subjects, it is heartening that the government is acting on the key messages.

The new India was well-represented in the budget, with aspects like data centres, quantum computing and e-learning finding a place. Entrepreneurship was also given support, and the FM repeated that wealth creators would be respected in India. These were very positive takeaways.

Finally, it was important that this budget comes in with a controlled fiscal deficit number. While the details will be worked out by the experts, a 3.5% deficit is certainly something that would not alarm the economists.

In a global economic milieu which is muted, and is only expected to grow at 2.5%, India with its young and talented workforce should be an attractive destination for investors. And with this budget, there was certainly the vision and the intent to get there.

The author is Managing Director, Apollo Hospitals Enterprise Ltd.

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