INDIA INC SPEAKS: Budget preparing India for digital age, creating jobs

Undisputedly, the Union Budget is one of the most anticipated events in India. Over the past 5 years, the current government has been consistent with the overarching objective of inclusion, ensuring India is ready for the digital age, promoting job creation and improving the quality of life. This Interim Budget was good and pragmatic. The FM focused on three factors, which align with the larger vision of the government. The focus areas were (i) the rural economy, (ii) housing and (iii) consumption.

The rural economy has been under pressure lately due to the financial pain of distressed farmers. In this regard, it was a rational decision to deviate slightly from the fiscal deficit target of 3.3% to provide a package to burdened farmers. I do believe that fiscal discipline is being maintained by the government and a slight slippage to 3.4% of the GDP will not be taken negatively by the markets. External risks remain – the direction of oil & commodity prices may continue to impact India's fiscal deficit plan.

The FM's second area of focus was to benefit those living in cities. The measures included rollover of capital gains under Section 54 (b) to be increased from 1 to 2 residential houses and extending the benefits of Section 80-IBA by a year for housing projects approved till March 31st, 2020. Further, under the proposed provision, two self-occupied house properties can be taken as tax-free.

Additionally, the FM said that a Group of Ministers were reviewing the GST burden on homebuyers. Imposition of GST has been one of the biggest causes of slowdown in sales of under construction properties. I believe that reducing GST from the current 12% on under construction properties will go a long way in boosting housing sales.

The third focus area of the Budget was on consumption. These included long-term measures to double the income of farmers and also providing those with small land holdings a direct income support of Rs. 6,000 per year. In urban areas, the intended beneficiaries were the middle class. The Indian middle class is often perceived to be the ignored segment. So, it augurs well that the middle class having a taxable annual income up to Rs. 5 lac will get a full rebate (from Rs. 2.5 lac).

Keki Mistry, Vice Chairman & CEO, HDFC