Big bold steps to restart Economic growth missing

Mohit Malhotra, CEO, Dabur India
Finance Minister Nirmala Sitaraman’s Union Budget 2020-21 can be termed as an Incremental Budget that continues the government's focus on doubling farmer income by 2022, offers significant sops at the lower end of the spectrum and enhances the purchasing power of the consuming class in India.

However, the big bold steps needed to restart Economic growth are missing. That said, the fact remains that the government had little room for manoeuvre. The big positive takeaways from this year's Budget would be the Income-Tax relief offered to lower income groups by slashing income tax rates and rejigging income tax slabs to reduce total tax payable by individuals. This would definitely put more disposable income in the pockets of the consuming class, particularly the Middle Class, which may help push demand for consumer staples.
The other positive step was the decision to raise the deposit insurance coverage to Rs 5 lakh from the current Rs 1 lakh. The abolishing of Dividend Distribution Tax (DDT) in the hands of the company is another welcome move. However, as dividends become taxable in the hands of shareholders, their taxable income may increase.
It's heartening to see the government continuing its focus on Bharat with the 16 action points plan for farmers, which would go a long way in boosting the agriculture sector. The government has also allocated more money for roads and highways this time around. This would go a long way in improving the connectivity with the hinterland and help FMCG companies. Dabur is investing on strengthening its rural footprint by reaching out to 55,000 villages by the end of this financial year, up from 44,000 in March 2019.
The increased investment in Infrastructure development is also expected give a boost to employment generation in the country. These long-term initiatives are expected to help improve overall consumer sentiments in the hinterland and also help improve their standards of living.
While this Budget is good on intent, it falls short of laying down the blueprint for creating an enabling framework that would promote growth. Overall, I would call this Budget a balancing act given the current fiscal situation.
(Share Manthan, February 02, 2020)

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