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Published on 1/02/2020 9:02:21 PM | Source: Abans Group

Views On Union Budget 2020 By Mr. Abhishek Bansal

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Below is the Views On Union Budget 2020 By Mr Abhishek Bansal’s Chairman and Managing Director, Abans Group of Companies.

The efforts of the Government are laudable in terms of supporting the MSMEs:

* Protecting certain customized, artistic, labor-intensive MSME areas like footwear and & furniture by raising import duties for outside competition
* Easing the audit and compliance burden by raising the limit for audit by an Accountant from revenue of Rs. Cr. to Rs. 5 Cr.; we should read this in the backdrop that MSMEs are a large employment driver and given their small size, and complexity of paperwork is a bane for them
* Easing issues of delayed payment faced by MSMEs by launching an invoice financing App; this would greatly ease their working capital requirements as funding for small business entities who don’t have the advantage of scale has its own issues
* Continuing from the above point on facilitating their working capital requirements, MSMEs can avail working capital loans from banks which would classify as quasi-equity and be fully guaranteed
* Aiding the invoice financing of MSMEs by NBFCs by making amendments to the Factor Regulation Act; this makes a lot of sense in an environment where NBFCs themselves are dependent upon funding from banks which they, in turn, pass on to the MSMEs
* Other good initiatives like Unified Procurement system & single-window e-logistics market; given the compact structure of MSMEs, this would allow them the freedom to focus on their core activities rather than worrying about these staff functions, the government in a sense would act as an aggregator who would obtain and pass on benefits of scale to the MSMEs

 

Personal tax exemptions will play a meaningful role:

* For new earners coming into the workforce, it would increase their cash in hand and give them the option of utilizing or investing these funds as they think best. So from a regime of guiding investments through tax exemption in certain instruments, the choice of investment of a larger part of the citizen’s earnings is being handed over to them – which is a good decision in era of a connected world where markets and individuals have the benefit of up-to-date information, which allows them to make their own decisions
* This would also send a strong signal to the consumers in terms of a vote of confidence which would help create a positive market sentiment wherein people do not hold back spending due to lack of confidence, rather they behave normally and hence kick-start the economy


The proposed divestment of part stake in LIC:

* Even though the government has in the past, missed its divestment targets, LIC and BPCL are the stars of stars in the public sector portfolio. Hence confidence is high that these divestments would take place with ease as per the targeted schedule and in turn, keep the fiscal deficit within the projected numbers
LIC is a massive entity in terms of market capitalization, even a limited percentage stake sale would easily help achieve the government’s fiscal deficit management target. Hence the government would still have a large controlling stake in LIC, hence the Indian citizen who has invested in LIC policies need not have any fear

* Sovereign Funds of countries have massive financial liquidity and when they will get 100% tax exemption on investment into infrastructure projects in India, it becomes an extremely lucrative proposition for them. Let us not forget that the extremely favorable loan received from Japan for construction of the high-speed railway between Mumbai & Ahmedabad is a prime example of such a sovereign fund

*  The Bullion Exchange which is proposed to be set up in GIFT City, Gandhinagar will allow foreign players to trade in our bullion in their own respective currencies, thus helping gold find its right price and in calibrating it with international bullion prices where today there is a differential. 

 

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