Monsoon finally hit Delhi on Friday, in sync with the budget for 2019-20 presented by the first full-time women Finance Minister (FM) Nirmala Sitharaman. While the rains brought people of Delhi relief from sweltering heat and humidity, the budget for this fiscal did not have the same effect on India Inc. Representatives from the industry, present at budget viewing session organised by both Federation of Indian Chambers of Commerce & Industry (FICCI) and Confederation of Indian Industry (CII), appeared to be in a sombre mood after the budget was presented.
The hike in customs duties on commodities and some electronic items left most industry experts wondering the fiscal path the government wanted to pursue. While one of the industry leaders sitting at FICCI avoided attacking the budget directly, he did mention that it left him puzzled since that particular industry was already under pressure.
Another industry leader of the telecom business said that as the industry was under tremendous pressure, they expected some relief from the levies and duties placed on telecom equipment. Representatives of the health sector seemed disappointed as they did not hear FM Sitharaman mention important schemes such as Ayushman Bharat or the details of allocation to it.
The other dampener was the railway budget. At the end of the budget speech when nothing major was mentioned on railways, one expert sitting at the CII budget viewing exclaimed, “Why was nothing on railways mentioned? Where is the railway budget?” Another industry veteran felt that FM could have done much more. However, the question of ‘much more’ was left hanging as he left in a hurry right after the viewing session.
The mood was further spoilt as the government decided to hike the surcharge on tax rates for people earning over Rs 2 crore. Many industry experts believe that it would result in an indirect tax hike of 3 per cent to 7 per cent for people in that tax bracket.
“The way the finance minister expressed it during the speech, it seemed that the surcharge is being increased in a way that the effective tax rate is going up by 3% to 7%, respectively. I would be surprised because it would be a steep increase in direct tax for individuals in that bracket,” said Pranav Satya, Partner, Tax and Regulatory Services at EY.
Other representatives, however, felt that the government should have actually taxed the wealthy. “We were expecting an estate tax but that did not come. This is in line with the global concept of taxing the wealthy,” a senior industry expert said.
Industry representatives, present at both FICCI and CII, were deeply engrossed in taking notes, listening intently, and discussing in hushed tones as FM Sitharaman spoke for close to two hours.
The complete silence at the FICCI auditorium as the budget speech was being read is a departure from previous years when participants cheered as the finance ministers addressed the house and announced various sops and rebates. Those sops and rebates were missed this year. In contrast, though people were excited at the CII viewing, they felt that the speech “did not give details of any scheme and allocation.”