If the intention of the Indian 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.
The biggest ripples were felt in locations far removed from India, and that specifically was from the proposal to cut down the number of days an NRI (Non-Resident Indian) can stay in India to maintain his status. The reduction (from 180 to 120 days) will be felt most by expatriate businessmen — this at a time when the government has been trying to get them to invest more in India.
If the government was serious about tax reforms and casting the net wide, it should get things right in India first. The Goods and Service Tax (GST), widely touted as the biggest enabler of ease of business, hasn’t delivered on the promise.
It’s inconceivable how the government — and Finance Minister Nirmala Sitharaman, in particular — can be so shortsighted. When China is undergoing an epochal crisis and businesses would be thinking about alternate destinations, India has managed to alienate a whole community of investors.
If the government was serious about tax reforms and casting the net wide, it should get things right in India first. The Goods and Service Tax (GST), widely touted as the biggest enabler of ease of business, hasn’t delivered on the promise.
The finance minister had set a fiscal deficit target of 3.3 per cent for the current financial year, but the government failed to meet its tax collection targets. Matters turned worse as persistent economic slowdown forced the government’s hand to announce tax cuts and other sops. Economists have already revised their fiscal deficit targets for FY20 in the range of 3.5-3.8 per cent. Some fear it might go as high as 4 per cent.
Disinvestment target
The government has set an ambitious target of Rs2.1 trillion (Dh108.2 billion) for the sale of government holding in state-run companies after scaling down the target for the current fiscal ending March. The disinvestment target for 2021 set at Rs3.85 trillion, looks rather ambitious.
The government has budgeted for lower dividends from the central bank and state-run lenders. For the fiscal year beginning April 1, the government expects to earn Rs896 billion ($12.6 billion) in dividends from the Reserve Bank of India and state-run banks, according to the budget on February 1. That’s lower than the Rs1.52 trillion the government estimates for the current year leaving the government with a rather ambitious target of bridging the fiscal gap primarily through asset sales.
more on the topic
- Indian Budget 2020: NRI business owners get a rude awakening
- Indian government explains new 'NRI rule' of budget, clarifies with example
- India budget fails to deliver on stimulus
- Indian finance budget: NRIs discuss their concerns regarding the new taxation proposal
- India budget: Salaried NRIs not affected by 120-day rule
