Largely, the steps proposed by the present government can be seen as focusing on the consumer sector and it is a matter of time before the implementation and outcome of these proposals kick in
Anil Talreja, Bhoutik Vyas and Pooja Ganesh
Finance Minister Nirmala Sitharaman announced the Union Budget proposals for the FY20 on July 5 which focused on welfare and growth in rural areas. The Budget also witnessed measures for aligning the economy towards environment-friendly resources such as solar power and electric vehicles.
The country had been pinning much hope on the newly re-elected government to announce measures to boost the consumer sector. One of the pillars of the government’s vision being 'Make in India' with particular emphasis on MSMEs is a visible effort to push for ease of business.
As part of the welfare of the overall population of SME and MSME entrepreneurs, the government is inclined to extend pension benefit for retail traders and small shopkeepers whose annual turnover is less than Rs 1.5 crore under a new Scheme - Pradhan Mantri Karam Yogi Maandhan Scheme.
Announcement of launching of the payment platform aimed at cutting down the time lag in receiving government payments, loan assistance up to Rs 1 crore for MSMEs within 59 minutes through a dedicated online portal and Model Tenancy Law that could potentially address rent related ambiguities, will all ease the burden on working capital cash flow of SME and MSME businesses.
To maintain the robust inflow and to make India an attractive destination for FDI, it has been proposed to ease the local sourcing norms in Single Brand Retail sector. While the finer aspects of the proposed relaxation in FDI norms are awaited, the initial teaser appears to send a positive message to foreign retailers looking to enter Indian markets.
The incentives announced by way of additional interest deduction on loans taken before March 31, 2020, for an affordable house valued up to Rs 45 lakh and for purchase of electric vehicles will serve as a mechanism to enhance disposable income of consumers, which is likely to be spent on consumer goods leading to an increase in trade and commerce and overall growth of the economy.
In respect of start-ups, the proposed leniency from tax scrutiny of valuation of share premiums and launch of an exclusive television programme to stimulate growth and facilitate match-making with investors will serve as an impetus for investors who stalled their investment ideas in the digital and e-commerce space looking to cater to the consumer products segment.
Additionally, the initiatives to improve connectivity and logistics through the Pradhan Mantri Gram Sadak Yojana, industrial corridors, dedicated freight corridors, Bharatmala and Sagarmala projects and Jal Marg Vikas would reduce the cost of transportation and increase competitiveness of domestically produced goods.
Largely, the steps proposed by the present government can be seen as focusing on the consumer sector and it is a matter of time before the implementation and outcome of these proposals kick in.
The author Talreja is a Partner with Deloitte India; Vyas is a Manager and Ganesh a Deputy Manager with Deloitte Haskins and Sells LLP.Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.