Thursday 2 April 2020

India unveils big infrastructure spend, tax cuts in 2020 budget

NEWS DELHI, February 1, 2020

India’s government led by Prime Minister Narendra Modi on Saturday presented the budget for fiscal 2020-21, vowing to boost income of Indians and their purchasing power, in a bid to revive domestic economic growth that has slumped.
Unveiling the financial roadmap for the coming year, Indian Finance Minister Nirmala Sitharaman announced a multi-billion dollar package of farm and infrastructure support in its budget, blowing past its fiscal deficit target for the year.
However, the stimulus fell short of market expectations and battered stocks, reported Reuters.
India estimates economic growth this fiscal year, which ends on March 31, will slip to 5% - its weakest pace since the global financial crisis of 2008-09, it stated.
Sitharaman later unveiled new infra road map to lend a cutting edge to flagship National Infra Pipeline (NIP) scheme. 
To augment India's infrastructure and create jobs, the government has launched Rs103 lakh crore infra projects besides providing about Rs1.7 lakh crore for transport infrastructure and accelerating highways construction, stated Sitharaman, while presenting the Union Budget 2020-21 in Parliament.
Sitharaman said focus is on infrastructure for economic development and 6,500 projects across sectors under NIP envisions ease of living for citizens, according to Economic Times
"In his Independence Day speech 2019, Prime Minister had highlighted that Rs100 lakh crore would be invested on infrastructure over the next 5 years. As a follow-up measure, I had launched the NIP on December 31, 2019 of Rs103 lakh crore," stated the minister. 
"It consists of more than 6500 projects across sectors and are classified as per their size and stage of development," observed Sitharaman.
About Rs 22,000 crore has already been provided, as support to Infrastructure Pipeline, she added.
According to her, nearly Rs2.83 trillion ($39.82 billion) will be allocated for agriculture and allied activities including helping farmers set up solar power generation units as well as establish a national cold storage to transport perishables.
“Farm markets need to be liberalized, farming need to be made more competitive” said the minister.
Following her budget speech, Modi came out in appreciation of Sitharaman for presenting her second Union  Budget on Saturday, calling it "visionary" and "action packed". 
Unemployment has been a major concern for the government, for which it has faced the opposition's criticism.
"The main areas of employment are agriculture, infrastructure, textiles and technology. In order to generate employment, these four areas have been given great emphasis in this budget," remarked Modi.
He said that with its efforts of doubling the income of the farmer, 16 action points have been created which will work to increase employment in rural areas. 
"Integrated approach to agriculture was adopted in the Budget, which along with traditional methods will increase value addition in Horticulture, Fisheries, Animal Husbandry and also increase employment," said Modi.
Income and investment were the two words he emphasised upon in his post-Budget speech, adding that the Budget will help Indians achieve their aspirations.
"We have made several special efforts in this Budget to promote employment generation in the field of technology. Several policy initiatives have been taken for areas such as new smart cities, electronic manufacturing, data centre parks, biotechnology and quantum technology," said Modi.
He added, through such efforts India can become a key part of global value chain, something the economic survey also talked about.
He also talked about the importance his government attaches to the industry. "Due to the removal of dividend distribution tax, Rs25,000 crore will come in the hands of companies, which will help them in further investment," he said.
Modi added that various tax concessions have been given to attract outside investment to India. He further stressed that tax benefits have been given for start-ups and real estate sector.
He said his government continues to believe in "minimum government, maximum governance".
Sitharaman pointed out that the government will spend $50.65 billion on a federal water scheme to address the challenges facing one of the world’s most water stressed nations.
Agriculture accounts for 15% of India’s gross domestic product and a source of livelihood for more than half of the country’s 1.3 billion population.
Terming the budget growth-oriented, Road Transport and Highways Minister Nitin Gadkari said it has given a massive boost to investment in infrastructure, which in turn would help revive industrial production and generate employment opportunities, crating more that 2 crore jobs.
These new projects will include housing, safe drinking water, access to clean and affordable energy, health-care, educational institutes, railway stations, airports, bus terminals, metro and railway transportation, logistics and warehousing and irrigation projects, stated the minister.
The National Infrastructure Pipeline envisions improving the ease of living for each individual citizen in the country, she said and added it will bring in generic and sectoral reforms in development, operation and maintenance of these infrastructure projects.
Also she said: "I propose to provide about Rs 1.70 lakh crore for transport Infrastructure in 2020-21."
The FM emphasised that a huge employment opportunity exists for India's youth in construction, operation and maintenance of infrastructure and National Skill Development Agency will give special thrust to infrastructure-focused skill development opportunities, reported Press Trust of India.
"I propose to set up a project preparation facility for infrastructure projects. This programme would actively involve young engineers, management graduates and economists from our Universities. It is also proposed to direct all infrastructure agencies of the government to involve youth-power in start-ups. They will help in rolling out value added services in quality public infrastructure for citizens," she said.
Sitharaman announced the introduction of a new personal tax system under which she offered cuts for those ready to give up a myriad of existing tax breaks.
“People have reposed faith in our economic policy,” said Sitharaman to the thumping of desks in parliament. “This is a budget to boost their income and enhance their purchasing power.”
The government also announced higher duties on a host of imports from walnuts to automobiles and even smartphone components.
To help generate revenue, she also announced the government will reduce stakes in the country’s largest insurer Life Insurance Corporation as part of its divestment programme.
In its annual economic report, released on Friday, the government predicted that growth would rebound to 6.0% to 6.5% in the fiscal year beginning April 1, but warned that it may have to exceed its deficit target to revive growth.
Sitharaman said the Modi-led government was planning to soon release a National Logistics Policy.
Besides, accelerated development of highways will be undertaken which will include development of 2,500-km access control highways, 9,000-km of economic corridors, 2,000-km of coastal and land port roads and 2,000-km of strategic highways.
Delhi-Mumbai Expressway and two other packages would be completed by 2023 and work on Chennai-Bengaluru Expressway would also be started.
She said under electronic tolling on national highways, FASTag mechanism enables greater commercialisation of highways so that NHAI can raise more resources.
"I propose to monetise at least twelve lots of highway bundles of over 6000-km before 2024," she added.
Indian Railways, she said aims to achieve electrification of 27,000-km of tracks. Besides, more Tejas type trains will connect iconic tourist destinations and high-speed train between Mumbai to Ahmedabad would be actively pursued, reported PTI.
On ports, she said the government would consider corporatising at least one major port and subsequently its listing on the stock exchanges.
Saying Inland Waterways received a boost in the last five years, the FM announced the JalVikasMargon National Waterway-1 will be completed and further, the 890 Km Dhubri-Sadiya connectivity will be done by 2022.
Sitharaman said the government was planning to develop 100 more airports by 2024 to support Udaan scheme and it is expected that the air fleet number shall go up from the present 600 to 1,200 during this time.
She proposed "about Rs 22,000 crore to power and renewable energy sector in 2020-21."
Meanwhile, some economists have cautioned that the global trade tensions and the outbreak of coronavirus in China, which has killed more than 250 people so far, pose a new risk to economic recovery by hitting cross-border commerce and supply chains.


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