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The Finance Minister read out the longest ever budget speech. By the end of it she was too
exhausted to even complete the speech. This pretty much explains the state of affairs.
Like a caged canary aspiring to fly in the blue sky, the finance minister very enthusiastically
read out the vision for new modern India. However, after two hours of aspirational efforts, it
was evidently clear that she does not have enough strength to break the shackles and release
herself. In the end, she was settled in the cage, totally exhausted and her wings ruffled.
The positive take away from the budget statement is that the aspirations are really high and
the vision of new modern India very clear. The government for the first time made an
unambiguous admission that the way forward is a progressive socio-economic structure that is
egalitarian but encourages and supports private enterprise. It is a major achievement to
officially abandon the socialist legacy that focused on curbing demand rather than enhancing
supply and hindered the seamless integration of Indian economy in the global economy.
Positive take away
The following thoughts in budget speech indicate that some significant structural reforms
could be implemented in next few years. These reforms with stabilization of the already
implemented changes like GST, IBC, simplified corporate tax structure, etc could help in
propelling the growth to the desired level:
• Private participation in LIC, Railways, & Public Sector Banks;
• Corporate farming through long term leases to improve productivity and profitability of
farm sector;
• A comprehensive vision for Integrated rural development;
• Healthcare in PPP mode;
• Admitting commercialization needed in education and training sector, and permitting
FDI and ECBs; admission that education in humanities stream is mostly unproductive;
and allowing online degree courses;
• Exploitation of idle farm and railway land for solar energy production;
• Unleashing power sector to grow like the telecom sector did in past 15years - prepaid
metering and portability of service provider;
• Acknowledging the needs of modern businesses and society - local data storage,
investment in modern technologies likes analytics, machine learning, robotics, bio-
informatics and Artificial Intelligence, ensuring high quality standards; world class
logistics, etc.;
• Focusing on the strengths of India - iconic heritage centers; preparing teachers and
healthcare workers for the global communities; preparing Indian universities for global
students;
• Increasing the age of marriage and motherhood for women
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01 tFecbruary2020
Financial markets
1. Certain specified categories of Government securities would be opened fully for non-
resident investors, apart from being available to domestic investors as well.
2. The limit for FPI in corporate bonds, currently at 9% of outstanding stock, will be
increased to 15% of the outstanding stock of corporate bonds.
3. To improve investors’ confidence and to expand the scope of credit default swaps, a
legislation to be enacted for laying down a mechanism for netting of financial contracts.
4. Proposal to expand CPSE debt ETF scheme to a new G-Sec Debt-ETF. This will give retail
investors access to government securities as much as giving an attractive investment for
pension funds and long-term investors.
5. Partial Credit Guarantee scheme for the NBFCs to be expanded whereby the Government
will offer support by guaranteeing securities so floated.
6. Rs22,0bn provided to Infrastructure Pipeline as equity support to Infrastructure Finance
Companies such as IIFCL and a subsidiary of NIIF. They would leverage it, as permissible,
to create financing pipeline of more than `1,00,000crore. This would create a major source
of long term debt for infrastructure projects and fulfill a long awaited requirement.
7. GIFT IFSC has an approved Free Trade zone for housing vaults. It already has 19
insurance entities, 40 banking entities. It has also provided for setting up of precious
metals testing laboratories and refining facilities. With the approval of the regulator, GIFT
City would set up an International Bullion exchange(s) in GIFT-IFSC as an additional
option for trade by global market participants.
8. Proposal to sell a part of its holding in LIC by way of Initial Public Offer (IPO).
Key estimates
01 tFecbruary2020
Tax proposals
Other
Exemption to Sovereign wealth fund
Income by way of dividend, LTCG capital gain or interest received by specified soveriegn wealth
funds from investments made in infrastructure companies before befoe 31 March 2024 shall be
exempt from tax.
Safe harbour limit of 5% under section 43CA, 50C and 56 raised to 10 per cent
No presumptive taxation of gains, in cases the stamp duty value is upto 110% of the sale
consideration in case of transfer of land or building or both. Earlier this limit was 105%.
Date of acquisition for side pocketed portfolio of mutual funds
It is clarified that the date of acquisition of the units of segregated (side pocketed) portfolio of a
mutual fund shall be the same as the date of acquisition of the original units.
01 tFecbruary2020
Important disclosures
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