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Saturday, February 1, 2020

economic news of india - world economic news - economics news for students - indian economy news

economic news of india - world economic news - economics news for students - indian economy news


Make-or-break Budget? Neither, says Swaminathan Aiyar

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It is said that size matters, but the longest speech in budget history did not guarantee Nirmala Sitharaman success. Her second budget had no big fiscal stimulus, several protectionist duties, and few convincing steps to revive a slowing economy. Disappointed investors sent the Sensex crashing 987 points.To cope with the economic slowdown, Sitharaman let the fiscal deficit slip from 3.3% to 3.8% in 2019-20, aiming for 3.5% next year. In a welcome gesture of transparency, she revealed that extra-budgetary borrowings were 0.7% of GDP in the current year and will rise to 0.8% next year. So, the true fiscal deficits for the two years go up to 4.5% and 4.3%, respectively. Kudos for improved honesty get tempered by the dilution of claims to fiscal prudence. High off-budget spending did not spark fast growth this year, and may not next year either. To be fair, the budget is too weak an instrument to revive the economy, and radical changes are needed across several sectors to improve productivity and competitiveness. If growth does not revive, do not blame Sitharaman alone.She is betting on a revival of the economy not so much by stimulating consumption — her income tax sops to the middle class will release a modest Rs 40,000 crore — as through a 21% rise in government capex, mostly on infrastructure. This will be financed mainly through record disinvestment of Rs 2.1 lakh crore next year, of which Rs 90,000 crore will be strategic sales (privatisation) and the initial public offering of LIC will be the star of the rest.The huge shortfall in disinvestment this year (only Rs 18,000 crore against a targeted Rs 1,05,000 crore) gives a warning that next year's target may not be easy to achieve. Nor is a fast expansion of infrastructure spending easy, since enormous preliminary work is required first.Telecom spectrum sales and taxes are estimated to bring in Rs 1.33 lakh crore, a huge but optimistic figure given the parlous state of telecom. However, the Sitharaman approach of depending more on non-tax revenue than borrowing to finance capex is a positive move. It will help cut market interest rates.The tax on cigarettes has been raised yet again, but not the tax on beedis. Tobacco kills, whether in cigarettes or beedis. True, the beedi industry employs many people, but if you must employ some people to kill others, maybe better ways can be found.The middle class and MSME industries, both strong BJP supporters, are budget gainers. India's income tax exemption level of Rs 5 lakh is thrice per capita income, which is thrice as high as in many other countries, a gift to the middle class. This class will have the option to pay lower rates if it forgoes the many tax breaks on offer. The budget rightly rescinds 70 old but obsolete tax breaks. MSMEs will now be excused compulsory audit for turnover up to Rs 5 crore, up from Rs 1 crore.Few Have Such Wide Tax SpreadThe top income tax rate remains over 42%, in stark contrast to the minimum corporate tax rate of 15% for new investors in industry, a privilege extended to new power plants in this budget. Very few countries have such a wide tax spread, which invites tax avoidance. Co-operatives will now join companies in being able to pay tax at 22% instead of 30% if they forego all deductions and exemptions.The dividend distribution tax has been abolished and all dividends will now be taxed fully in the hands of shareholders. This will raise the earnings per share of corporations, and benefit high-dividend companies. The markets hoped for the abolition of long-term capital gains tax but in vain.An overdue yet courageous move is to prune the fertiliser subsidy by moving towards a direct benefit to farmers. Sitharaman says this would induce better utilisation of manure. But the budget gives no details of how much fertiliser prices will go up by, or over what period.To nab rich Indians going abroad to escape high taxes, the definition of resident has been extended from 182 days to 240. NRIs living in zero-tax countries will have to pay Indian tax on global income. This, alas, is more likely to induce rich NRIs to give up Indian citizenship than pay higher taxes.Sitharaman was categorical in her budget speech on going protectionist.She said if items can be made in India there is no need to import them, and that India must reduce import dependence (as distinct from increasing export competitiveness). She said she would not allow Indian jobs to be lost by foreign dumping, ignoring that maxim that dumping should be tackled with anti-dumping duties, not a flat import duty. She continued the budgetary trend since 2017 of hiking import duties on ever-more items. Her targets ranged from electric vehicles and components to footwear, chemicals and appliances like fans. Some tax breaks for imports are also being pruned.One welcome innovation aims to reduce the 4.8 lakh direct tax disputes. If taxpayers pay just the tax demanded, the interest and penalty will be waived.Withholding tax has been cut to 5% for selected foreign investors. Sovereign Wealth Funds will be exempted entirely from tax for investments in infrastructure. This will bring in more dollars, but discriminate against domestic investors.A 100% tax holiday for startups will now apply to firms with up to Rs 100 crore turnover, up from ?25 crore. However, startups require animal spirits more than tax breaks: They are based on enormous optimism rather than rational tax calculations.Headlines earlier claimed this would be a make-or-break budget. It is neither.It avoids a spending spree to try and revive the economy, leaving that wideranging job — quite rightly — to the Prime Minister's Office.

FM leaves the NRIs and the rich poorer

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MUMBAI: Indians in Dubai and other tax havens who do not pay income tax, rich local investors and people drawing fat salaries will have to fork out more tax. While a person with an annual salary of Rs 15 lakh can save up to Rs 78,000 under a new optional regime of 'lower tax without incentives', professionals who have settled abroad and members of business families who escape tax on overseas income by getting an 'NRI' tag will find the going tougher.And while the new regime may lure many in the Rs 5-15 lakh bracket, most with higher salaries may prefer paying old tax rates and continue to claim deductions like rent allowance and mediclaim premium to reduce taxable income.For years, well-heeled Indians have been carefully dividing time in India and abroad to lower tax outgo. A resident could attain NRI status — and pay no tax on foreign income — by staying abroad for more than 182 days. From now on, they will have to spend at least 240 days abroad to be an NRI. Armed with this rule, the taxman will go after these 'stateless persons' — individuals who arrange their affairs in such a way that they pay no tax in any country."Crew of merchant vessels, non-domiciled Indians in the UK who have no tax liability there, and Indians employed in Singapore having offshore income in Hong Kong will now have to pay tax," said Mitil Chokshi, partner at Chokshi & Chokshi, a tax consultancy.Need to Examine Options"It's harsh and some NRIs may probably surrender their citizenship," said Mitil Chokshi.Faced with a strident tax office and harsh laws against money laundering and benami deals, many Indian businessmen have relocated to other jurisdictions with easier tax laws. While some gave up their Indian passports, most chose to run businesses in India as NRIs (while being based in tax-friendly countries).Even as the government promised to respect wealth creators, it continued to intensify moves to tax the rich. "For instance, the withdrawal of dividend distribution tax (DDT) will hurt big local investors as well as non-residents who earn large dividend income as the said income will be taxed at the appropriate rate. If a non-resident has to take advantage of the lower tax as provided in the treaty between that country and India, she has to meet the conditions of 'principal purpose test'," said senior chartered accountant Dilip Lakhani. This would mean explaining to the Indian tax department the reasons to invest from that country. "So, if total income together with dividend earnings cross Rs 50 lakh, such assessees will have to disclose their assets in the tax return," he said.

Budget says make in India, industry not sure

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NEW DELHI | KOLKATA | MUMBAI: Consumers can expect to pay more for imported food and grocery items, shoes, ceiling fans, wooden furniture, kitchenware, appliances, hairdryers, shelled walnuts and other items with the budget raising basic customs duty to as much as 100% on some of them to encourage local producers.Electric vehicles are also set to get pricier with customs duty on imports of fully built and semi and completely knocked down vehicles raised by 5-15 percentage points. Duty has been imposed on items such as sacramental wine and angostura bitters. At the other end of the spectrum, feature phone prices could increase with basic customs duty doubled to 20% from 10% on printed circuit board assemblies (PCBAs) used in making the devices."IKEA is disappointed with the customs duty hike… which impacts furniture and many other home furnishing categories," said Peter Betzel, CEO of IKEA India.Duties have been raised on butter, cheese, shoes, ceiling fans, food grinders, iron, room heaters, tea and coffee makers, kitchenware and hairdryers to 20% from 10%. In the case of margarine, peanut butter, chewing gum and infant food, duty has been hiked by 30% and more. The duty on shelled walnuts, durum wheat seeds and margarine has been raised to 100%. 73860109 "There is no scope to absorb the duty hike and nor does sales volume justify local production," said the chief executive of a leading small appliances maker. "Prices will go up and the discount offered to consumers will come down."Puma India managing director Abhishek Ganguly said about 70% of the footwear sold by the company is imported. "We don't have the kind of technologies, expertise and skillset required to manufacture high-end shoes in India. Until then, it's a double whammy," he said. "Ultimately, it will impact the consumers as prices will go up by at least 10%."The import substitution push is in service of the government's 'Make in India' initiative.'Will Prevent Dumping by Chinese companies'Bajaj Electricals chairman Shekhar Bajaj said the move will prevent the dumping of goods by China because of US sanctions. "Chinese companies have surplus capacities and this duty will prevent any indiscriminate imports," he said.The government has also increased import duties on components for home appliances which may lead to a marginal hike in the price of refrigerators, washing machines and air-conditioners by a few hundred rupees. The duty on refrigerator and AC compressors has been increased to 12.5% from 10%, and that on small motors to 10% from 7.5%.The Hyundai Kona and MG Motors ZS EV, two electric SUVs recently launched in India, could sport heftier price tags. They are currently in the Rs 19-25 lakh range. It's not clear whether carmakers will absorb the hike or pass it on, experts said. Deliveries of the MG model haven't begun yet.Customs duty on completely built imports of electric trucks and buses has been increased to 40% from 25%. The price hike on electric buses from Chinese manufacturers such as BYD and Foton may be upwards of Rs 10 lakh if they decide to pass it on. Completely built imports of trucks and buses with internal combustion engines could also become costlier with the duty raised to 40% from 30%.On the other hand, the budget has cut customs duty on palladium, which is used in catalytic converters, to 7.5%. The current levy is 10% with a countervailing duty (CVD) of 12% and a special CVD of 4%. The move is expected to give a fillip to government efforts to encourage cleaner air.Local Manufacturing'Make in India' has been the priority of the government for greater value addition and employment generation in the country, said Tata Motors electric mobility unit president Shailesh Chandra."This will drive the efforts of OEMs more towards local operations and ensure greater commitment to electrification in the country," he said.Of the 300 m PCBAs used annually, 160 m are made in India and go into smartphones. The rest, valued at about ?6,000 crore, are imported and used in basic or featurephones, experts said. These will eventually be made in India, pointed out India Cellular & Electronics Association chairman Pankaj Mohindroo.(With inputs from Rasul Bailay, Writankar Mukherjee, Anandita Singh Mankotia, Ketan Thakkar and Nehal Chaliawala)

Budget 2020: Growth unlikely to revive in a hurry

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By Sonal VarmaFaced with a slowing economy, the key question for this budget was whether the government would try to quickly boost economic growth or prioritise structural reforms and fiscal prudence. To us, the budget suggests the government chose the longer and more difficult but sustainable route over an easier fiscal short-cut.Those looking for the budget to revive growth will be disappointed, although in reality there are no shortcuts. Any fiscal pumppriming of the economy would have other adverse consequences. It can lead to higher long-term interest rates or risk a sovereign ratings downgrade. The assumption that fiscal stimulus will lead to a durable growth rebound is also debatable. For instance, personal income tax cuts could lead to higher savings rather than increased consumption.Higher allocations for government schemes and investment projects do not always result in higher actual offtake, due to execution bottlenecks on the ground. Investment has been held up for many reasons and not just due to a lack of funding. Given limited financial resources at the government's disposal, there are clearly limits on pump-priming growth.Instead, the intention in the budget appears to look beyond short-cuts towards a more durable growth revival. In agriculture, there is a focus on boosting farm productivity through cold storage and diversifying rural incomes outside of farming. To boost manufacturing in India, the budget proposed an "Investment Clearance Cell" to enable facilitating entrepreneurs, encourage investment in the electronics sector, focus on higher-quality products and implement a new scheme to improve export credit disbursement.Consistent with the National Infrastructure Pipeline, higher allocations under various transport infrastructure verticals including roads, railways and ports are proposed. India has much greater infrastructure investment needs than what is allocated in the budget. To address domestic savings constraints amid much larger investment needs, the budget announced measures to attract more longterm risk capital such as tax exemptions for the sovereign wealth funds of foreign governments on infrastructure investment as well as potentially opening up certain specified categories of government securities to nonresident investors.To address complaints around tax harassment, the proposal to set up a new taxpayers' charter that clearly establishes taxpayer's rights is a great initiative. Even the stimulus in the form of a personal income tax cut is more of tax rationalisation, which is in line with the medium-term goal to move towards no exemptions and lower tax rates.However, the budget does have its drawbacks.India's financial sector is currently hamstrung by the rising risk of a further deterioration in the asset quality cycle. The budget does not directly address these risks for either banking or the non-bank financial companies.Certain budget assumptions are also optimistic.Even though nominal GDP growth (at 10% y-o-y) and gross tax revenue growth (12% y-o-y) assumption look relatively realistic, there are potential downside surprises from lower disinvestment proceeds and lesser collections under small savings schemes.Finally, the medium-term fiscal deficit target of 3% of GDP has been pushed so far out that it suggests a low conviction in even reaching it.Overall, the budget is neutral for short-term growth. Given India's triple balance sheet problem involving banks, corporates and shadow banks, growth is unlikely to revive quickly and a prolonged period of growth consolidation still lies ahead. The budget could not have changed this fundamental reality. It rightly lays down the medium-term growth vision, but this needs to be quickly implemented without tripping on execution. The lack of fiscal activism should keep India's overall macro balances in check and potentially open up some room for monetary policy easing again.The writer is Chief Economist, India & Asia ex-Japan, Nomura.

Will be able to reap benefits of PSU divestment only in next financial year

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Finance Minister Nirmala Sitharaman spoke to Swaminathan Aiyar and Nayantara Rai of ET NOW on the impact of her second budget and what's next for the economy. Edited excerptsThe market has reacted poorly to the Budget. What do you think they misunderstood? Today the stock market was not in full force and I guess we will have to wait till Monday. I thought we have been very responsible in our numbers...we have said very clearly private investments will happen when it will happen...we have already given a corporate tax rate cut and I am sure it will happen in due time. The government has been spending and growth in capex in the last seveneight months is there for everyone to see. Now, will we continue doing that? Yes, of course...our expenditure commitment on infrastructure is well on course.Have you been very ambitious on the disinvestment front?To be fair to the disinvestment department, it was in July that I announced it (the targets) and by February, they had done all the necessary leg work … and it is going to happen in a couple of months. Certainly, I will not benefit in this financial year by their sale but...it is going to happen in the next financial year.There is talk of flight of capital. Do you think more could have been done to make the capital markets robust?At this rate you will tell me (about) everything that is not done and forget what I have done... I have addressed DDT, I have addressed personal income tax, I have addressed corporate tax ... you were telling me economy is going through a tough time... despite all that, we have been bold enough to take a considered call on all this.There is an attempt to catch rich people trying to escape tax and become NRIs...It is not a question of catching, it is more a question of recognising that...you are losing out on a lot of people who are neither paying here nor paying elsewhere.So, it is very clear they want to escape tax?Yes, but then if my taxes are now so favourable, I would rather have them here... and pay tax also. Now, if the rates are unfavourable and they are going out, you can blame me...There is going to be a 1% TDS levy on ecommerce companies. Is this a new source of revenue?What is a TDS eventually? If you are taxpayer, that is going to be offset. So, that is not a new tax, that is not an additional burden...why should every TDS be seen as an additional tax when you are given an option to offset it.By increasing customs duty you talked about how you want to have a level playing field. Are you perhaps sending a signal that Make in India, manufacturing, SMEs will only thrive when you raise customs duty?Two things guided us in making that list on whom the import duty has been levied. One, the kind of goods that are coming... which are manufactured in India, largely by MSMEs and certainly equal, if not better quality, to most of them. Should we import goods which we are producing anyway...only because they are coming dirt cheap? Are they essential to our consumption? We have to...decide at the cost of dumping of goods...What you are saying goes completely against the fundamental premises of free trade.I agree absolutely, but dumping is not free trade either.There is a WTO mechanism to take care of dumping...The mechanism that exists, not just in India, but in any other country against dumping... will have to be strengthened...but till then, I will not allow Indian industries to die, particularly those in the minuscule, micro medium sector.

Cess on medical device imports may cast a shadow on US deal

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New Delhi: The proposal to impose a nominal cess on imported medical equipment may cast a shadow on a trade deal that is likely to be signed when US president Donald Trump visits India in the last week of this month. Finance minister Nirmala Sitharaman cited India's turnaround from a country dependent on imports for medical equipment few years back to exporting them in large quantities while proposing the cess in her budget speech.The sector deserved a fillip and there was also the need to provide health services to all through Ayushman Bharat, she said. "To achieve the twin objectives of giving impetus to the domestic industry and also to generate resource for health services, I propose to impose a nominal health cess, by way of a duty of customs, on the imports of medical equipment keeping in view that these goods are now made significantly in India," Sitharaman said. The cess would be used for creating infrastructure in health services in aspirational districts, she said.A trade deal pegged above $10 billion (more than Rs 70,000 cr) has been slated to be finalised when US Trade Representative Robert Lighthizer visits Delhi. Sources had earlier said that India's price control regime on medical devices was a key obstacle in trade talks but it was resolved. However, the budget announcement about cess could create a fresh issue, though sources said that the matter is being addressed.The US government has been particularly interested in removing price controls on coronary stents and knee implants. Medical device imports went up 24% to Rs 38,837 crore in FY19, according to the latest export-import data.

TARP-like aid for NBFCs, realty booster big misses of Budget

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By Motilal OswalThe Union Budget 2020-21 was announced in the backdrop of an unfavourable economic environment, with real GDP growth weakening to sub-5 per cent level. As such, there was high expectation from the Budget to reinvigorate the economy by 1) stimulating investment and 2) boosting personal consumption.Nevertheless, the fiscal space to stimulate the economy was very limited. Given the constraints, the Finance Minister seems to have done a tightrope walk to meet the key expectations of boosting investment and personal consumption.Despite all the constraints, the Finance Minister in some way attempted to address the key demands such as 1) removal of 20% dividend distribution tax (DDT) and 2) lowering of personal income taxes in line with the corporate tax rate and 3) boosting investments.While DDT was completely abolished and made taxable at the hand of recipients at marginal tax rates, the Finance Minister has introduced an optional simplified tax structure based on income tiers with lower rates for individuals, but without any exemptions. Given the multitude of exemptions available to a salaried person, net benefit to the individual would depend on his utilisation of existing deductions. Hence, benefits seem limited on this front, despite lower tax rate option, while removal of deductions could have implications for financial intermediary plays.With an eye on boosting investments, the Finance Minister has allowed sovereign funds a 100 per cent tax exemption on interest, dividend and capital gains for infrastructure investment made before March, 2024. This seems like a key positive and should help the government in its disinvestment plans for FY21.Some of the other key announcements were with regard to i) increase in deposit insurance from Rs 1 lakh to Rs 5 lakh, ii) need to liberalise farm markets, iii) increase in FPI participation in corporate bonds, iv) increase in Infrastructure spend by 21% YoY and v) customs duty increase in auto and auto ancillaries, which should benefit domestic manufacturers.The fiscal slippage for FY20 from budgeted 3.3 per cent to 3.8 per cent was not a surprise, given the gross revenue shortfall of Rs 3 lakh crore (Rs 1.6 lakh crore direct income tax + Rs 1.3 lakh crore indirect taxes). In the assumptions for FY21 the disinvestment target of Rs 2.1 lakh crore seems aggressive, given that the actual disinvestment achieved is far short of revised FY20 disinvestment target of Rs 65,000 crore. While the plan for disinvesting LIC seems a very positive reform, the process could take a long time and completing the same prior to March, 2021 could be a key challenge.The key misses for the Budget seems to a) total overlooking of the expectations of a TARP-like structure to address NBFC issue and boosting credit to the unorganized segment, b) No significant policy allocation for Make or Assemble in India and c) no measures to resolve the real estate stalemate.Given the constraints, the Finance Minister seemed to have been able to only partially meet some of the high expectations that the market had. This could imply near-term market volatility for retail investors. However, this should not discourage long-term investors, as India continues to provide significant bottom-up entrepreneurial investment opportunities, despite the tough macros.(Motilal Oswal is Managing Director & CEO of Motilal Oswal Financial Services. Views are his own)

Budget below par, but market reaction 'irrational', say experts

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The government announced a multi-billion dollar package of farm and infrastructure support in its Budget for 2020-21, as it blew past its fiscal deficit target for the year, but the stimulus fell short of market expectations and battered stocks, Reuters reported.The FM abolished Dividend Distribution Tax (DDT), which means the companies will be paying out more to their shareholders. She also proposed a new personal tax regime with seven tax slabs.The government also cut personal income tax rates for individuals for fiscal year 2020-21. In a big announcement, Sitharaman informed Parliament that India's fiscal deficit is now pegged at 3.8 per cent for FY20, a significant loosening over the widely touted target of 3.3 per cent.Here are analysts views on Budget 2020:Nilesh Shah, MD & CEO, Kotak Mahindra AMCBudget is good on intent. However, the key is efficient execution in a time-bound manner. There are many positives to simplify things and encourage entrepreneurs but again, key will be execution in a time-bound manner. Intent needs to be converted into implementationS Naren, ED & CIO, ICICI Prudential AMCWe have to look at the Budget in the context of September corporate tax cut. If you look at the stress parts of the economy they are rural, SME and urban unaffordable real estate and stretched middle class. The government has worked very hard to resolve stress on the stretched middle class by giving them good tax cuts. I believe Budget can't resolve rural, SME and urban unaffordable real estate issues. Budget was also in the backdrop of market at all-time high and fears of coronavirus.Nirmal Jain, Founder & Chairman of IIFLExpectations were very high and therefore market is a bit disappointed, but there are a lot of incentives for the foreign investors. Dividend Distribution Tax (DDT) has been abolished and therefore obviously foreign investors will benefit but then it becomes fully taxable in the hands of shareholders, which is not the right way of doing it because shareholders are also owners and as owners of the company they pay tax on profits and it gets taxed again. So, this might change the dividend culture of many companies, it will impact the private sector investment which has been very sluggish for the last 2 to 3 years at least.Amar Ambani, Senior president & Head of Research, YES SecuritiesThe market saw a sharp sell-off during Budget, as expectations were sky-high. The market expected an overhaul of personal income tax slabs, whereas we expected only a minor tweak, in a year that has seen flat tax revenue growth. Market participants possibly also expected more measures to revive economic growth and ignored the containment of fiscal deficit in FY21 to only 3.5%. We are quite satisfied with the budget math however. Tax receipts appear achievable, especially once some flow comes through the amnesty scheme for direct tax cases. Likewise, disinvestment proceeds will also be large with LIC IPO on the cards. On the expenditure front, 13% yoy growth budgeted for FY21 matches with our estimate. Ramp up in GST revenues is a key monitorable. Targeting high disinvestment is big positive for the market. Less government in business is desirable. It will help contain borrowing. DDT now in the hands of investors at their IT slab rate is negative move for domestic investors.Lakshmi Iyer, CIO- debt and head of products, Kotak Mahindra AMCFiscal deficit at 3.5% for FY 2021 quite in line with market expectations. Markets would be keen to see if budget sends out signals of growth at any price or growth at a reasonable price. FPI limits in corporate bond increased to 15% good measure to improve liquidity and get inflows.Nikhil Kamath, Co-founder, Zerodha & True BeaconNothing substantial seems to have changed, for the government to expect a 10 percent nominal GDP growth rate continues to sound like hubris, the situation on the ground is a lot worse, the need of the hour might be to recognize the issues at hand and transparently deal with them. Personal income taxes being cut do not make a substantial difference to consumption, the rich tax which has essentially with surcharges brought the effective tax rates to 42 percent for the highest bracket continues to be a big deterrent to consumption. This is not yielding substantial revenue gains for the government, and it might have been prudent to do away with this. No word on a reduction in long term capital gains, this continues to move foreign capital to similar geographies in South East Asia, which do not tax long-term capital gains. We also didn't hear anything about Security transactions tax as STT continues to be the biggest deterrent in making our stock markets robust by adding a significant barrier to transacting frequently and thus increasing the impact cost around trading equities. rationalizing STT could make a plethora of day traders profitable and thus indirectly add significant no of jobs.Vinod Nair, Head of Research at Geojit Financial ServicesBudget is below par considering that the market had very high expectations from the government, as a support to the economy and more spending was lacking in details. Adding flexibility to fiscal deficit of FY20 is positive but extending the same to FY21 would have provided more confidence to the market. In a normal scenario this Budget would have been considered as good as it provided tax benefit to the common man, corporates and focussed on farmers' incomes, but the situation required more.Vijay Chandok, MD & CEO, ICICI SecuritiesWith growth resurrection being the key priority, the government has stepped up the capital expenditure allocation by 21%. Credibly, glide path was maintained with fiscal deficit for FY21E pegged at 3.5% of GDP, while maintaining the inclusive growth template through focussing on quality of spending. Prima facie, FM's speech implies that simplification and rationalisation of personal income tax rates is likely to be key catalyst for consumption pickup. Furthermore, abolition of Dividend Distribution Tax is positive for listed space and Indian equity capital markets as a whole with benefits accruing to small as well as overseas investors.V Balasubramaniam - MD and CEO, India International Exchange India INX is fully geared up and ready to launch Rupee Dollar Futures and Options contracts trading as soon as approvals are received from regulators. Further he said that we will also be keen to set up the International Bullion Exchange at GIFT IFSC. The budget announcement by Honorable FM to reduce the withholding tax from 5 per cent to 4 per cent for IFSC Exchange listed bonds will be an immense boost to all issuers and will immensely help them in attracting more international investors. Índia INX has already listed MTN programs worth USD 47 billion dollars with drawdown of USD 18.5 billion dollars till date. This announcement should greatly incentivise issuers to choose Índia INX as the preferred platform for listing their international bonds and masala bonds.Vijay Bhushan, President at ANMIWe thank the Finance Minister for accepting our recommendation for abolishing the Dividend Distribution Tax. This move will benefit retail investors. Another highlight of the budget is the LIC IPO, which is akin to the Saudi Aramco listing for Indian Capital markets, and will be IPO of the decade.Dharmesh Kant, Head- Retail Research, IndiaNiveshBudget 2020-21 failed to meet market expectations on the rationalisation of LTCG tax and STT. Discontinuation of LTCG and STT was important to push the investment cycle in equity markets. However, on the positive side, the complex tax regime for taxpayers has been simplified with the slabs rejig. With the optional new regime, taxpayers will have to evaluate what works better. Those committed to long term saving and investing via Section 80C will have to consider tax-saving as different from investing.Krishna Kumar Karwa, Managing Director - Emkay Global Financial Services Stocks investors will be disappointed with no relief on LTCG and the lack of big-bang stimulus on real estate or infrastructure. The removal of the dividend distribution tax seen as a continuation of earlier step of reducing corporate tax is well appreciated and sends the right signals to local and global investors. The option to individuals to opt for a lower tax slab structure with no deductions or to continue with the earlier higher slabs with deductions for home loan EMIs, investments in insurance etc seems slightly confusing.Balu Nair, Interim CEO at Metropolitan Stock ExchangeThere are couple of big highlights for the financial markets in this year's Budget. The first is the abolishment of dividend distribution tax, which has been a long standing demand of the market. The introduction of tax holidays for startup ESOPs is highly significant as well. These definitely should help the equity market. Equally, there are several incentives for the development of the debt market with the focus on attracting foreign investors, whose presence in this segment would be highly beneficial. The LIC listing will be eagerly awaited by investors and will provide huge fillip to capital raising through the primary market.Ravindra Sudhalkar, ED & CEO, Reliance Home FinanceThe Finance Minister's Budget proposals for real estate sector will revive the housing sector growth. The move to extend tax sops to affordable housing projects for another year is a step in the right direction to encourage developers of affordable housing projects. It will enable the government to meet its objective of providing Housing for All by 2022 by reviving development activities.S R Patnaik, Partner and Head - Taxation, Cyril Amarchand MangaldasFM has accepted the demand of the industry to reverse the taxability of dividends back to the recipients. Now dividends will be taxed in the hands of recipients. She also referred to deductibility of dividends received by a holding company. The announcement to have a legal framework to prevent tax related harassment is truly welcome and shows government's commitment. It will go a long way in enforcing will business and investor trust and confidence. Budget 2020 built on 3 themes of aspirational India, Economic development and caring India is a balanced exercise. The highlight is the proposed IPO of LIC. The changes in personal IT is only marginal since the benefits will be available only to those who opt for no exemptions. Abolition of DDT is good for markets.Pawan Kumar Vijay, founder, Corporate Professional GroupLIC IPO will bring more effectiveness and good governance Practice in LIC. : Establishing of data center parks would help develop IT infra and make India a hub for IT Data storage. It is a good initiative. Tax on ESOP given by startups to the employees is deferred for 5 years or when they leave the Company. It is a very positive step for employees of the startups.Bhavin Shah, Leader Financial Services Tax , PwCFM's marathon budget speech focusing on the trinity of aspirational India, economic development and caring society, has re-emphasized the importance of reliable and robust financial sector. While the reading of fine print will bring out the details, proposal to abolish DDT, exemption to sovereign wealth funds for investment in infrastructure and extension of lower withholding tax rate of 5% for interest income would be a big hit with foreign investors.Kamlesh Rao, CEO Aditya Birla Sun life InsuranceFinance Minister has announced a balanced budget inspite of existing challenges in hand. It has focused on generation of employment and inclusive growth through increased expenditure on rural economy, infrastructure, MSME and healthcare. Abolition of DDT, tax relief to middle class and lower middle class segments along with simplification of the tax regime will improve public sentiment and augur well for the economy. While, listing of LIC is a good move which will bring focus on the life insurance sector, other expectations of sector could have been met better. The insurance industry will be watchful of the implication of the direct tax changes in the new tax regime.Upasna Bhardwaj, Economist, Kotak Mahindra BankThe budget seems largely on lines with expectations with the fiscal deficit in FY20 pegged at 3.8% and 3.5% for FY21. The net market borrowing for both this year and next year is marginally lower than expectations, which could provide brief respite to the bond markets. Further, aiding sentiments could be a more realistic nominal GDP growth assumption of 10% and the related tax and expenditure growth. The income tax tweaks should help in boosting consumer confidence and demand raising hopes of a revival in growth. Meanwhile, the focus on infrastructure, agricultural warehousing, education and manufacturing sector should help ease structural bottlenecks over the next few years.Mihir Vora, Max Life InsuranceThe income, expenditure and deficit numbers for FY21 are realistic and achievable. Dividend Distribution Tax removal is a positive, but the proposal to now tax dividend at the marginal rate takes some of the sheen off that. Taxing dividends in the hand of the investor may have a marginal long-term impact on REIT and InVIT valuations. No significant incentives for infrastructure and real estate is a disappointment. Outlay for rural and Agri sectors are less than expectations. Budget reflects the constraints of the sluggish economy within which FM has had to operate.

FM's Rs 8,000 crore boost will help India bridge gap in Quantum computing with US, China

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India's plan to invest Rs 8,000 crore over the next five years in the National Misssion on Quantum technology and its applications comes at a time when the world is making bets on the emerging field that has potential impact in areas such as cyber security in the future."We are right in time for Quantum investment - Most quantum investments are in the US, we are in perfect time because companies like IBM and Google are going to be investing a ton of money and infrastructure assets towards Asia, countries like Japan and Singapore," said Sanchit Vir Gogia, chief analyst and CEO at Greyhound Research. "if India has a feasible enablement for quantum we are in perfect time."In October, Google became the first company in the world to achieve Quantum Supremacy after its its 54-qubit Sycamore processor was able to perform a calculation in 200 seconds that would have taken the world's most powerful supercomputer 10,000 years. In 2018, China claimed that it has built a quantum computer and also launched a quantum satellite into space.India's department of science has a national mission on Quantum Technologies and Applications, which is collaborating with institutions and companies to build homegrown capablity in quantum technologies.Indian technology service providers have also been carrying out research and development work in quantum computing, as they bet that the technology will increasingly become mainstream. Infosys CEO Salil Parekh told ET in a recent interview that the company had begun looking at quantum offerings for the next wave of its technology investments."This is new. We will not have something next quarter or in the near term. But we are working on it," Parekh said.The newly appointed IBM CEO, Arvind Krishna has also spoken to media earlier on the importance of India improving its focus on quantum computing, citing that China is heavily investing in the technology.

Single test for non-gazetted govt jobs

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The government has decided to set up a single test for recruitment to non gazzetted posts.Finance minister Nirmala Sitharaman proposed to set up a national recruitment agency as a specialised common test for recruitmment to non-gazetted post.The test centre will be set up in every district especially in aspirational district.The move will help aspirants to aim for a single test to apply for government jobs.