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The Union Finance Minister of India presented Union Budget for FY20 in the parliament. The budget was presented in the light of the following:
(a) Overwhelming mandate received by the BJP led NDA in the general elections for 17th Lok Sabha 6 weeks ago. The mandate was underpinned by promises to (i) double farmers’ income in 3 yrs by making huge investment in farm sector; and (ii) create employment opportunities by ensuring high growth through massive investment infrastructure sector and making India an industrial hub for the global economy.
(b) Marked slowdown in economic activity over past few quarters, characterized inter alia by (i) poor GDP growth especially in manufacturing; (ii) poor corporate earnings; (iii) subpar GST and direct tax collections; (iv) probability of a subpar monsoon; and (v) strong global headwinds to growth reflected in worsening current account deficit. This limits the scope for any meaningful fiscal stimulus.
(c) High expectations of radical reform agenda in view of near absolute majority for the government in both the houses of the Parliament.
(d) Urgent need to raise long term sustainable resources to fund the ambitious growth plans.
(e) Substantial monetary stimulus already in place through easing of rates, bond purchases through OMO and USD purchases under currency swap program
(f) The interim budget already presented on 1 February 2019.

Vision 2030
1. Building physical and social infrastructure;
2. Digital India reaching every sector of the economy;
3. Pollution free India with green Mother Earth and Blue Skies;
4. Make in India with particular emphasis on MSMEs, Start-ups, defence manufacturing, automobiles, electronics, fabs and batteries, and medical devices;
5. Water, water management, clean Rivers;
6. Blue Economy;
7. Space programmes, Gaganyan, Chandrayan and Satellite programmes;
8. Self-sufficiency and export of food-grains, pulses, oilseeds, fruits and vegetables;
9. Healthy society – Ayushman Bharat, well-nourished women & children. Safety of citizens;
10. Team India with Jan Bhagidari. Minimum Government Maximum Governance.


Key observations
Big ideas
The following ideas presented in the budget are noteworthy:  Mega Manufacturing Park  Study in India  National grids for highways, power, gas and water  Development/Deepening of market for corporate bonds and CDS  PPP in building Railways infrastructure and delivery of passenger freight services  Promotion of organized rental housing  Self-reliance in aviation with domestic aircraft leasing and MRO infrastructure  Use of big data for improving compliance (pre filled It returns etc.)  Incentives for Electric Vehicles  Divestment of land holdings of CPSEs  Creation of payment platform for MSMEs to enable filing of bills and payment thereof on the platform itself  Commercialization of space capabilities.

Key announcements relating to Capital Markets
1. To “consider” raising minimum public shareholding of listed companies to 35%.
2. Proposal to rationalize and streamline the existing Know Your Customer (KYC) norms for FPIs to make it more investor friendly.
3. Proposal to set up a “Social Stock Exchange” to facilitate fund raising and listing of social enterprises and voluntary organizations.
4. Interoperability of NSDL/CSDL with RBI depository to facilitate retail participation in government securities.
5. Consultation for further opening of FDI in aviation, media and insurance sector. 100% FDI to be permitted for insurance intermediaries. Proposal to ease local sourcing norms for FDI in Single Brand Retail sector.
6. FPI limits in companies enhanced to sector limits with option to companies to set a lower limit for themselves. Proposal to merge NRI-Portfolio Investment Scheme Route with the Foreign Portfolio Investment Route to provide seamless market access to NRIs.
7. Rs.700bn additional capital for PSU Banks.
8. Proposal to provide one time six months’ partial credit guarantee to Public Sector Banks for first loss of up to 10% in case of high-rated pooled assets of financially sound NBFCs.
9. HFCs to be regulated by RBI henceforth.
10. ETFs to be considered at par with ELSS.
11. Disinvestment target raised to Rs1.05trn.

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