If the only intent of the Indian Government from its February 1 budget was to confuse and confound, it sure delivered on that. By some margin.
So much so, the Bombay Sensex dropped 1,000 points – the biggest drop ever on Budget Day.
But it was in locations far removed from India that the biggest ripples were felt, specifically the proposal to cut down the number of days an NRI (Non Resident Indian) can stay in India before he becomes a “resident Indian”, and with it get taxed on his income.
In one misguided move, the Indian Government seems to have tossed out the goodwill that was there in one key audience – the NRI business community.
The reduction in the number of days from 180 to 120 that NRIs can stay in-country will be most keenly felt by expat businessmen – this at a time when the government since 2014 has been trying to get them to park more investments in India. The whole “Make in India” campaign – which had failed to pick up traction so far – will become unstuck if NRI-owned businesses now decide to give India a miss. A complete miss…
It’s inconceivable how the Indian Government – and Finance Minister Nirmala Sitharaman, in particular – make such a hash of things. When China is suffering through an epochal crisis and businesses would be thinking about alternate destinations, the Indian Government has managed to alienate a whole community of such investors.
If the Government was serious about tax reforms and casting the net wide, get things right within India first. The Goods and Service Tax (GST), widely touted as the biggest enabler of ease of business, hasn’t delivered on the promise. Key domestic industries are having gaping holes, and banks hobbled by corporates and business chieftains who do not want to pay up on the generous loans they received in the recent past.
Instead of cleaning up the domestic mess, to rework the NRI rules, smacks of misplaced priorities. Allowing NRIs access to Indian Government bonds for the first time and on the same day hobbling their prospects in India is jarring. No amount of fine sounding phrases will help with the hurt, Madam Finance Minister.