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    Budget 2020 has not moved the needle in improving consumption, says Biocon's Kiran Mazumdar Shaw

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    Budget 2020 has not moved the needle in improving consumption, says Biocon's Kiran Mazumdar Shaw

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    Overall the government has not really moved the needle in terms of boosting consumer sentiment and that is my worry, said Kiran Mazumdar-Shaw CMD of Biocon.

    Kiran Mazumdar-Shaw CMD of Biocon, Pawan Goenka Managing Director of M&M and Rathin Roy Director of NIPFP gave their take on the Union Budget 2020.
    Roy said, "We continue to be in the middle of a very serious fiscal constraint. This is reflected in the fact that if you look at the budget estimates for 2019-2020 and compare them with the revised estimates for 2019-2020, the tax to GDP ratio has fallen by 0.7 percent and the entire increase in the fiscal deficit is 0.5 percent. So, the entire increase in the fiscal deficit is not for counter cyclical spending or fiscal expansion, it is to plug a hole in the tax to GDP ratio."
    "I have been warning about this for some time, it is a very serious matter, we are not disinvesting as we planned, we are not collecting taxes as we planned and that is then causing the government either to borrow or to cut expenditure and this is extremely serious, especially, in a year when we know that the growth story is even worse than we knew yesterday," he said, adding that growth has fallen from 8 percent to 7 percent to 6.1 percent and now to sub 5 percent. "In the face of this the fiscal instrument to expand fiscal policy and expand public expenditure is caught in a hole - where we are unable to collect tax revenues and therefore we have to increase borrowing just to stay in the same place," said Roy in an interview with CNBC-TV18.
    Shaw said, "In terms of business confidence this budget has boosted that for India Inc. because it started with a reduction of the corporate tax a while ago and now they have added to it by announcing various measures in terms of  clamping down on tax terrorism and announcing various other measures for various sectors, MSMEs and allowing the investment in corporate bonds at 15 percent and so on and so forth."
    "Of course as far as corporate India is concerned abolishing the DDT will only boost the bottom line. So, from a business confidence point of view the sentiments are good," she added.
    However, if one were to look from consumption point of view then this budget has not moved the needle in terms of increasing consumption and consumer spending, said Shaw. "If you look at the kind of reduction in tax rates that they have given to the middle income salaried class, I really do not think there is a great benefit because they have removed all the exemptions. Moreover, transferring the DDT in the hands of the recipients is not going to go down well either because that is also taking money out of the hands of the consumer, at least for the retail investor," she said, adding that so while the bond markets might do well and welcome this kind of an announcement, I am not so sure that the average shareholder is happy with this announcement.
    "Overall the government has not really moved the needle in terms of boosting consumer sentiment and that is my worry," she said.
    Agreeing with Mazumdar-Shaw, Goenka said, "DDT was a long standing demand of the corporates but now it is being taxed in the hands of the recipient and therefore it does not really help in terms of overall taxation. The big need right now was to give an immediate boost to consumption and this budget perhaps could have done little more in that regard."
    "In terms of overall mid to long term, the things that have been announced today will really do very well - will fix lot of things, will make structural reforms and create momentum but the worry for near-term remains," said Goenka.
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