Finance Minister Arun Jaitley has presented a pragmatic, balanced budget but he has not addressed one critical issue, the huge non-performing assets the banks are saddled with, according to Amit Jain, a tax expert of KPMG.
He was speaking at a session on the Union Budget organised by the Vizagapatam Chamber of Commerce and the AP Information Technology Association here on Saturday. He said the Union Budget provides only Rs 10,000 crore for the recapitalisation of the banks, which are burdened with NPAs of Rs 5 lakh crores.
He said the infrastructure companies owed banks huge sums of money, contributing to the problem of NPAs. The impact of demonetisation on the economy had not been fully assessed, and "even if remonetisation takes place at the expected pace, we still have to wait and watch. The Finance Minister says there will not be any disruptive impact during the current financial year."
He said the proposals to introduce a new metro rail Act and give importance to building airports in tier-two cities were welcome. Andhra Pradesh in particular could derive benefit, as the State had taken up metro projects in Vijayawada and Visakhapatnam and the State Government wants to build an airport in each of the 13 districts.
Sumit Gupta, another tax expert, said the FM had not met the expectations of the tax payers such as raising the IT exemption limit to Rs 4-5 lakh per annum, but he had rationalised the tax structure and given some relief to the lowest bracket of tax payers by reducing the rate to 5 per cent from 10 per cent. He said that up to Rs 3 lakh income per annum there would be no income tax and the limit can easily be raised to Rs 5 lakh per annum, with proper tax planning and investments.
Sanjay Ahuja, another tax expert of KPMG, said the FM had brought down the tax rate to 25 per cent from 30 per cent for MSMEs, and given a great boost to affordable housing projects. A special rate of 10 per cent on income earned through transfer of carbon credits has been introduced, reducing litigation relating to the issue.
Monish Row, the president of the Vizagapatam Chamber of Commerce, said that on the whole the Union Budget was very disappointing, in fact a damp squib, even though it was getting a positive response from many commentators.