Great News: NDA govt's Rs.2.10 Lakh Cr booster to kick start consumption
The NDA government on Monday said the Non - Performing Assets (NPAs) of Public Sector Banks (PSBs) has DIPPED to ₹7.27 lakh crore as on September 30, 2019.
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| Photo: Moneycontrol.com |
Moreover, for increasing consumption, apart from the measures to be undertaken by the government to raise farmer incomes, there are a lot of tax proposals, that would result in higher disposable income in the hands of the consumers.
It includes an effective reduction in the individual tax rates by revising the tax slabs (option to shift to the revised tax slab subject to not claiming any exemptions/deductions), abolishing Dividend Distribution Tax reducing the effective tax rate on dividends, etc.
The 16-point action plan spelled out by the FM and the ₹ ₹2.83 trillion outlay focused on agriculture and allied activities would bolster rural infrastructure, increase farmers’ produce realisation and drive rural consumption.
This growth agenda will obviously include the micro, small, and medium enterprises (MSMEs), too, who will be playing a significant role in generating job opportunities.
Further, there are additional reforms proposed for startups around deferment of taxability of ESOPs, an increase in threshold limit from Rs.25 crore to Rs.100 crore to qualify as an eligible start-up, etc.
However, the Dividend Distribution Tax might probably increase the tax incidence for all people who are earning above Rs.15 lakh, mainly because they will have to pay tax at the marginal rate.
Also, the deferment of tax on employee stock ownership plans (ESOPs) for five years, or until startup employees leave the company, would assist the startup ecosystems, retain and add talent, generating significant employment and in the process boosting the consumption.
The Finance Minister (FM) has given relief to the individual taxpayer, which will create a revenue loss of Rs.40,000 crores. Reductions in Minimum Alternate Tax and other taxes payable by corporations will lead to a further loss of Rs.25,000 crores.
The FM has proposed to cover this loss of Rs.65,000 crores with increased borrowings that will increase the fiscal deficit from present about 3.40% to 3.80% in the coming financial year.
I have always supported an increased fiscal deficit for jumpstarting growth.
The NDA Government has already given Rs.1,45,000 crores booster dose to the Indian economy through the reduction in the Corporate Income Tax, last September.
Therefore, the total liquidity infusion by the FM, Nirmala Sitaraman comes at a whopping amount of Rs.2,10,000 lakh crores in FY20, which will definitely give a push to consumption.
Though the brrowings will increase the burden of interest to be paid in the future, but at the moment we don't have to worry much about, as the inflation is within RBI's tolerance levels.
According to a report released in Aditya Birla Capital: India’s per capita GDP will soon cross $2,000. Historically this has been the trigger point for acceleration in consumer spending for several countries such as Singapore, South Korea China and Russia etc
The changing demographics of India is pushing consumerism – namely increasing number of young generation contributing to a growing workforce, urbanisation and a quantum increase in average household income
It includes an effective reduction in the individual tax rates by revising the tax slabs (option to shift to the revised tax slab subject to not claiming any exemptions/deductions), abolishing Dividend Distribution Tax reducing the effective tax rate on dividends, etc.
The 16-point action plan spelled out by the FM and the ₹ ₹2.83 trillion outlay focused on agriculture and allied activities would bolster rural infrastructure, increase farmers’ produce realisation and drive rural consumption.
This growth agenda will obviously include the micro, small, and medium enterprises (MSMEs), too, who will be playing a significant role in generating job opportunities.
Further, there are additional reforms proposed for startups around deferment of taxability of ESOPs, an increase in threshold limit from Rs.25 crore to Rs.100 crore to qualify as an eligible start-up, etc.
However, the Dividend Distribution Tax might probably increase the tax incidence for all people who are earning above Rs.15 lakh, mainly because they will have to pay tax at the marginal rate.
Also, the deferment of tax on employee stock ownership plans (ESOPs) for five years, or until startup employees leave the company, would assist the startup ecosystems, retain and add talent, generating significant employment and in the process boosting the consumption.
The Finance Minister (FM) has given relief to the individual taxpayer, which will create a revenue loss of Rs.40,000 crores. Reductions in Minimum Alternate Tax and other taxes payable by corporations will lead to a further loss of Rs.25,000 crores.
The FM has proposed to cover this loss of Rs.65,000 crores with increased borrowings that will increase the fiscal deficit from present about 3.40% to 3.80% in the coming financial year.
I have always supported an increased fiscal deficit for jumpstarting growth.
The NDA Government has already given Rs.1,45,000 crores booster dose to the Indian economy through the reduction in the Corporate Income Tax, last September.
Therefore, the total liquidity infusion by the FM, Nirmala Sitaraman comes at a whopping amount of Rs.2,10,000 lakh crores in FY20, which will definitely give a push to consumption.
Though the brrowings will increase the burden of interest to be paid in the future, but at the moment we don't have to worry much about, as the inflation is within RBI's tolerance levels.
According to a report released in Aditya Birla Capital: India’s per capita GDP will soon cross $2,000. Historically this has been the trigger point for acceleration in consumer spending for several countries such as Singapore, South Korea China and Russia etc
The changing demographics of India is pushing consumerism – namely increasing number of young generation contributing to a growing workforce, urbanisation and a quantum increase in average household income
Increase in comsumption means positive trigger for FMCG, Media, Bank, etc, stocks.
The Indian Markets should Cheer this encouraging development today (4 February, 2020).
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