The following article is an initiative of CNBC-TV18 and is intended to create awareness among readers.
To discuss the fine-print of Budget 2020 and assess its hits and misses, CNBC-TV18 held ‘The Budget Townhall 2020’, where top team of Finance Minister Nirmala Sitharaman answered questions from the India Inc.
The event saw panel discussions and interactions between the audience and the architects of budget on an array of subjects including GST collections, divestments, LIC IPO, startups, new tax regime and dividend distribution tax (DDT).
Here’s a glimpse of various pointers that were discussed during CNBC-TV18’s The Budget Townhall:
While announcing her second budget, Sitharaman set an ambitious divestment target of Rs 2.10 lakh crore, out of which it expects to garner Rs 90,000 crore by selling stake in public sector banks and financial institutions.
Talking about the expectations and the roadmap to attain the set target, NITI Aayog CEO Amitabh Kant said there is huge emphasis on private sector to play a key role.
“This budget is essentially about wealth creation and across the board in this budget, there is huge emphasis on private sector playing a key role. The theme is that wealth creation must happen through the private sector and therefore public sector divestment Rs 2.10 lakh crore really holds the key,” said Kant adding “NITI Aayog is in the process of making some major recommendations across the board of key public sector undertakings and this should happen within a month or so.”
Kant also spoke about brownfield infrastructure projects, asset monetisation, and huge interest in railways. Kant also added that roads should attract private sector so that NHAI raises resources and creates more assets.
Talking about the National Logistics Policy, Kant said, “A lot of homework is already been done, the ministerial work has been done. The process of inter-ministerial consultations are at an advances stage, it should go to the Cabinet for approval. I think it should take broadly about two-three months.”
To fulfil the divestment target, the government announced selling a part of LIC by the way of an IPO.
Tuhin Kanta Pandey, Secretary, DIPAM, said, “This is an in-principle decision which has been announced by the FM on the budget day. It’s a very large organisation and people have been talking about it for some time that there is a need for disclosure, greater need for wider public participation in the enterprises.”
During the discussion, he also spoke about challenges in LIC IPO including the legislative challenges.
Contrary to the expectations, Sitharaman did not rollback the LTCG tax. Talking about the rationale behind it, Ajay Bhushan Pandey, Revenue Secretary said, “All classes of income, I think, really should be taxed and the long term capital gain is also a class of income and then this is an established principle of taxation system and prevalent in most powerful countries.”
Meanwhile, experts also deliberated on the Dividend Distribution Tax (DDT), employee stock option plan offered by startups to retain talent, GST collections and more.
Moving on with the discussion, the stalwarts also spoke about the new tax regime. Commenting on the same, Pramod Chandra Mody, Chairman, CBDT said, “The option is the way to go. They should have that option. In case people are more comfortable or still want to enjoy deductions and exemptions they can continue with the old regime.”
While addressing the trust deficit issue and reviving the credit growth, Rajeev Kumar, Secretary, Finance said that there was no risk to the financial system.
“The kind of responsible behaviour which has to come in all the financial institutions when you are doing an intermediation that has been established. The PSUs and private sector banks have gone through what they should have been doing. In terms of asset qualities, it is much better, NPAs have been sorted out, PCRCs are at all-time high, recoveries are at all-time high, they are in profits, by and large,” he said, adding “Future of intermediation will be tech driven, has to be more connected, every bank today is in position to lend, they have sufficient liquidity. Credit should not be a problem.”
Measures about bond market
On financial markets, about deepening of the bond market, certain specified categories of Government securities would be opened fully for non-resident investors, apart from being available to domestic investors as well. Government also proposed to expand by floating a new Debt-ETF consisting primarily of government securities.
Krishnamurthy Subramanian, Chief Economic Adviser, said, “Bond, debt and equity capital have been fostered through this budget. The finance minister talked about a separate set of issues of Government of India securities, which will have no restrictions and as a result those GOI securities can now be part of the international bond indices. Even for a small weightage for India in these bond indices, the extent of supply of debt capital that can come in and debt that it provides thereby to the bond markets is quite critical.”
Budget for growth
While delivering his vote of thanks, V. Vaidyanathan, MD & CEO, IDFC FIRST Bank said the Budget 2020 was about making India competitive and on a growth trajectory.
“There is a consensus from everybody and this is a very fiscally responsive budget. In terms of being able to meet the tax collection numbers for this year, the expectation of growth… there is lot of optimism. The key terms that stuck on me today was divestments, privatisation, selling Air India, opening up FDI, ease of doing business, Make in India competitive, saying wealth creators were appreciated. I do get the confidence that the government is on the right path,” he said.To know more about CNBC-TV18’s The Budget Townhall 2020, watch the full video here.
Exclusive offer: Use code "BUDGET2020" and get Moneycontrol Pro's Subscription for as little as Rs 333/- for the first year.