The budget is modern in its flavour and makes a strong and ambitious statement as it lays down India’s vision of being a $5 trillion economy. The budget is aimed at building a social economy and each of the 10 points have ingredients for future job creation. Agriculture, rural areas, start-ups, electric vehicles, education, skills, make in India, infrastructure, employment-generation, employability, ease of doing business, ease of living, and digital seem to be the theme of the government’s focus.
The MSME sector got the right attention in the budget as it has the potential to create large-scale formal jobs. Easing the angel tax norms and doing away with scrutiny for start-ups, extending the Stand Up India scheme till 2025, 2% interest subvention for goods and services tax (GST)-registered MSMEs on fresh or incremental loans, clearance of loans up to ₹1 crore for MSME within 59 minutes and payments through an online portal will boost investment and create jobs apart from relaxing the hassles faced by the MSME.
Changes in customs duty proposed to strengthen Make in India by promoting large manufacturing plants at several locations across the country, in turn, will generate jobs and ensure balanced rural-urban development.
A likely boost to employment through the infrastructure segment is there as well. The Pradhan Mantri Gram Sadak Yojana (PMGSY) outlay was increased by 22.6% from last year and that’s a good indication of the employment opportunities the sector will offer. Defence manufacturing and space programmes will significantly aid formal job creation and growth.
The changes in corporate taxation will encourage the corporate sector to set higher growth targets, thus contributing to economic and job growth. The simplification of GST returns will help the cause of ease-of-doing business for smaller businesses. Relaxing single-brand retail sourcing norms will help brands open more outlets, thus, creating more jobs.
The finance minister’s proposal to skill 10 million youth through the Pradhan Mantri Kaushal Vikas Yojana (PMKVY) is interesting. This includes language training and also lays focus on new-age skills. While directionally it is significant however we must remind ourselves that we need to build blocks around skill one floor at a time. The impetus on vocational skills in auto, retail, healthcare, hospitality, manufacturing et al sectors, which have the potential to generate large-scale employment continues to be subdued.
The emphasis on consolidation and rationalisation of multiple labour acts into four labour codes is a step in the right direction, signifying the government’s intent in pushing through labour reforms and enhancing employability. It will also boost job creation in the formal sector. These four codes should eventually be consolidated into a single labour code.
For those in the formal employment sector, there is no major change in the tax slab for salaried employees. Major disappointment to the middle-class salaried group is that there is no tax relief proposed.
As proposed in the interim budget, there will be no tax if the net taxable income is ₹5 lakh or less. This proposal will have a major impact on the net take home of lower-middle-class employees.
The tax burden on employees drawing a salary between ₹2 crore and ₹5 crore will increase as the surcharge has been enhanced by 3%. The surcharge is up by 7% if the taxable income is more than ₹5 crore. This change will have a huge impact on the salary drawings of the employees in these categories.
Another proposal is that individuals can file their tax returns by using their Aadhaar if PAN is not available. This will increase the number of tax returns filing by individuals. It will also help employers in minimizing non-compliance in terms of filing returns.
The government also proposed an additional deduction of ₹1.5 lakh for housing loans if the cost of the house is less than ₹45 lakh. This proposal will have a huge impact on the tax of home buyers in this category. Individuals can view pre-filled tax returns with all incomes such as salary, dividend, and interest, which will help individuals in filing the returns faster.
Contrary to the hype created, this budget focuses on the basics. The expectation was to see more large-scale structural reforms but it has emphasised on the right steps in taking forward some of the reforms initiated in the earlier Modi administration.
I hope the implementation of the decisions taken is done with precision to maximize the benefits for the economy.
Rituparna Chakraborty is co-founder and executive vice president of TeamLease Services.