The Budget prudently manages allocations, taxation relief and social welfare measures.

In agriculture, Finance Minister Nirmala Sitharaman announced a review of the agricultural research setup to bring in seed resilience, atmanirbharta for oil seeds and introduction of climate resilient varieties. The main announcement related to creation of digital public infrastructure (DPI). This is expected to provide assistance in issuance of Kisan Credit Cards and in digital crop surveys.

Another highlight of the Budget is the set of schemes on employment linked incentives, human resource development, reskilling and entrepreneurship. We need to push job creation by encouraging more private investments especially in labour-intensive sectors. It is important to build a robust MSME ecosystem for sustained growth in consumption and broad-based investment. Talent must also remain a key focus. India will continue for a while to be a demographically young country. It is imperative to invest in the future generation through social sector reforms with a focus on education and health, upskilling and reskilling talent to adopt to a changing work landscape.

Several announcements were made focusing on skilling. One month wage scheme to formal sector entrants, incentives on EPFO contributions and reimbursements to employers, partnership in setting up working women’s hostels, loans with guarantees to students, financial support for education, interest subvention and the highlight of it all — internship in top companies linked with CSR recognition — are all in the right direction.

The abolition of angel tax is also a welcome move, along with a credit guarantee scheme for MSMEs, mudra loans, stress credit support and announcement of twelve industrial parks. While the measures will aid local manufacturing, MSMEs and entrepreneurship, further steps on ease of doing business would have been appreciated. This includes making the National Single Window System (NSWS) issue-free, streamlining regulatory compliance processes, and improving trade facilitation channels, apart from a having a more transparent digital infrastructure.

Coming to taxation, the comprehensive review of duty rate structure, calibration in basic custom duty as well as changes in standard deductions for personal taxation are good measures. The core issue of managing investor sentiments is a different matter. Increase in capital gains tax both on short and long terms investments are going to weigh largely on retail investors. Further, the increase in securities transaction tax (STT) on futures and options will impact the derivatives investors.

Perhaps, this is coming out of an observation in the Economic Survey that speculation in the markets have gone up. Though the industry was anticipating some rationalization measures, the impact may be twofold.

The STCG revision will temper the market and decrease speculation while the LTCG move may impact the markets in the short run albeit ensuring that investors hold a long term view on India.

Finally, the Budget delivers a message of belief in the India Story.

The writer is Partner, Deloitte India

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