Budget 2020: Key Recommendations

To boost domestic consumption, spending and savings within the nation

Jan 31, 2020 - 05:30
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Budget 2020: Key Recommendations
02-600-397

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Rajiv Agarwal, CEO & MD, Essar Ports.

[/vc_column_text][vc_column_text]Objective:

    • To boost domestic consumption, spending and savings within the nation
    • To boost infrastructure growth paving way for lowering of logistics cost enabling manufacturing and EXIM growth
    • To enable India becoming USD 5 Trillion economy

[/vc_column_text][vc_column_text]Recommendations:

  1. Rationalization & Lowering of Personal Income Tax Rates
    • As on date Personal Income Tax coupled with indirect taxes leaves very little with public for saving and investments.  Rationalization of Personal Income Tax rates is essential to ensure there is surplus funds available in the household for both saving & spending.
    • The personal income tax rates should capped at 25% in line with corporate tax rates
    • The same would pave way for GDP growth in the country and 

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  1. Access to low cost financing & Setting up Infrastructure debt funds / Sovereign Wealth fund: 
    • Infrastructure projects are highly capital intensive with long gestation period.  
    • Govt. has unveiled its plan for 100 lakh crore investment in the Infrastructure Sector going forward.  Funding of same should be addressed in the Budget through creation of Infrastructure debt funds / Sovereign Wealth fund.  This will enable low cost and long term borrowing requirement for the Infrastructure Projects as has been the case worldwide. 
    • More Banks like IIFCL should be created with the mandate to take lead and fund capital intensive long gestation infrastructure projects.  This will bring much desired liquidity in the system and enable private sector participation.

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  1. xtension of Corporate Tax Benefits to infrastructure companies/ SPV setting up new Projects like that in Manufacturing Sector
    • Recently in Sept, 2019, the corporate tax for new manufacturing companies was reduced from 25% to 15% to boost manufacturing in the country.  
    • To enable similar boost in investments in the Infrastructure Sector (which has recently seen dearth of new investments) similar benefit should be extended; wherein new Projects/ Companies/ SPV will have reduced corporate tax rate of 15%.  This will enable more liquidity in the system and ensuring sustainable investments over long term for expansion and modernization.

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