With the economic slowdown hitting hard the consumer and retail businesses in 2019, everyone was keenly awaiting this year’s Budget with the expectation of getting a quick jump-start to the economy and consumer spending.
In the longest ever Budget speech, Finance Minister Nirmala Sitharaman kickstarted the Budget on three strong pillars viz., aspirational India, economic development and building a caring society that is humane and compassionate.
Sitharaman announced, inter alia, many initiatives to reduce corporate tax costs, boost job creation, accelerate manufacturing and grow industrial activities. The key initiatives laid out in relation to the consumer sector that would bring in a new lease of life are as under:
Agriculture and allied sectors
The finance minister laid down a 16-point action plan to boost agriculture and allied sectors which formed part of the “Aspirational India” theme. The government is committed to doubling farmers’ income by 2022 and has set aside a provision of Rs 2.83 lakh crore for the rural sector and allied activities.
A few of the prominent themes from the 16-point action plan are as under:
1) State governments to implement national laws such as Contract Farming Act, 2018, APMC Act, 2017 and Model Agriculture Land Leasing Act, 2016
2) Comprehensive measures for 100 water-stressed districts
3) Helping farmers set up solar pumps; link pumps to solar grid and set up solar power generation units on barren lands
4) Shift from excessive use of chemical fertilisers to traditional organic and other innovative fertilisers
5) Viability funding to set up new warehouses
6) Village storage schemes to increase farmer’s holding capacity and reduce logistics cost
7) “One product one district” to be encouraged with the help of state governments
8) Online organic market to be strengthened
9) Agricultural credit target of Rs 15 lakh crore for FY 2020-21
10) Fish production to be increased up to 20 million tonnes by FY 2021-22, fishery exports to increase to Rs 1 lakh crore by FY 2024-25
Agriculture continues to be one of the largest livelihood and employment generating sectors in India. The government’s comprehensive action plan for doubling farmers’ income by 2022 is imperative for reviving the sluggish rural demand.
Allocation for MSMEs
The government has set aside a provision of Rs 27,300 crore for the development and promotion of industry and commerce for FY 2020-21.
A few of the salient points in relation to micro, small and medium enterprises (MSMEs) are as under:
1) Opportunity on Government e-Marketplace (GeM) being the single platform for procurement of goods, services and works
2) Single window e-logistics market to be created aiming to make MSMEs competitive
3) Enabling non-banking finance companies (NBFCs) to extend invoice financing to the MSMEs through TReDS
4) Schemes to provide subordinate debt for entrepreneurs of MSMEs
5) Extending the window for debt restructuring
6) Launching app-based invoice financing loans product
7) Reduction in compliance burden – turnover limit for tax audit increased from Rs 1 crore to Rs 5 crore.
Transport and hospitality sector
The Budget laid emphasis on accelerated development of highways, economic corridors, coastal and land port roads, as also seaports and inland waterways aiming to provide growth opportunities for the transportation sector and in turn boosting other sectors of the consumer industry.
The government acknowledges the importance of tourism as a contributor to growth and employment and keeping this in perspective, the finance minister has announced measures for enhancing tourism in India through development of archeological sites as iconic sites with on-site museums, as also a maritime museum.
The consumer sector has been facing strong headwinds over the last few quarters, including rural job losses, stagnating wages, besides an erratic monsoon, which led to consumers in India drastically cutting back on their cash spending capacities. One can only play the waiting game to see if these action points will provide an impetus to the sector and the Indian economy achieves the targeted 10 percent Gross Domestic Product (GDP) growth set by the government.
(Anil Talreja is a Partner, Pushkar Khire is a Director and Bhoutik Vyas is a Senior Manager with Deloitte Haskins and Sells LLP)
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Updated Date: Feb 05, 2020 11:33:16 IST