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Economic Times | 03 Feb, 2021 | 11.49AM IST
Union Budget 2021 News: Fitch, S&P flag high fiscal deficit, slow consolidation
Global rating agencies flagged “higher-than-expected” fiscal deficit figures and a gradual pace of consolidation announced by finance minister Nirmala Sitharaman in her budget presentation.
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Developers who operate the asset have been seeking input tax credit on leasing. The government in the budget could have given some direction to the GST council, as operators of any rental asset, be it warehousing or data centres, were seeking this relief.
- Gaurav Karnik, partner and national leader-real estate, EY India
The office space, which has been the most impacted sector due to the work-from-home scenario, could have been recognised in this Budget, a reduction in stamp-duty duty for commercial real estate, offering single-window clearance and reduced GST on leasing would have helped in the market recovery.
- Rajat Johar, country head, Skootr
Proposed duty levy on components to hit Indian handset makers most: Industry
Indian smartphone makers such as Lava and Micromax are likely to be the most affected by the increase in basic customs duty (BCD) on import of mobile phone sub-parts as the move will mostly impact the sub-Rs 10,000 category, as per industry executives and analysts.
Strong nominal GDP growth will be critical in the government's plans to grow its revenues at a clip of 23% next year, and in keeping the debt stock stable at just above 90% of GDP through 2023.
- S&P
Plan to spend $130 billion on defence modernisation in next 7-8 years, said Defence Minister Rajnath Singh
The wider deficits and more gradual pace of consolidation will lift India’s government debt and put more onus on the nominal GDP growth outlook in our assessment of the medium-term debt trajectory, which is core to our view of India’s sovereign rating.
- Jeremy Zook, director, Asia-Pacific sovereigns, Fitch Ratings
The budget's emphasis on capital expenditure marks a noteworthy shift, and higher investment in India's physical infrastructure should help to raise investment potential and competitiveness in the economy over time.
- S&P
Sitharaman's bad bank plan sparks concern
- India’s move this week to set up a bad bank to manage one of the world’s largest piles of soured loans could bring unintended consequences
- Some market participants say they’ll be closely whether it could wind up inflating the price of distressed assets
- This could happen if the creation of the bad bank reduces pressure on loan owners to price such debt at discounts attractive enough to draw other buyers
The budget forecasts wider near-term deficits of 9.5% of GDP in FY21 and 6.8% in FY22 and a more gradual pace of consolidation than we had previously anticipated, reaching 4.5% only by FY26.
- Jeremy Zook, director, Asia-Pacific sovereigns, Fitch Ratings
Reduced GST on leasing would have helped in the market recovery, as per experts
Commercial real estate developers and co-working operators are disappointed by the government’s lack of support for the sector in the Budget announced on Monday.
GoM to decide bare minimum PSUs in strategic sectors, said Tuhin Kanta Pandey, DIPAM secretary
The bare minimum presence of public sector enterprises (PSEs) in strategic sectors – announced by finance minister Nirmala Sitharaman in the budget – will be decided by a group of ministers after consulting ministries in each identified sector, Department of Investment and Public Asset Management (DIPAM) secretary Tuhin Kanta Pandey told ET on Tuesday.
Decision to tax PF interest based on the principle of equity, said Ajay Bhushan Pandey, Revenue secretary
The decision to remove the tax exemption on provident fund contributions of ?2.5 lakh and above in the budget was based on the principle of equity, said revenue secretary Ajay Bhushan Pandey.
New central schemes added in rejig, allocation jumps 12.3%
The budget has increased the number of centrally sponsored schemes to 33 from 31 now, adding three new schemes while doing away with one old scheme and replacing one with a new scheme.
Goodwill depreciation out; companies face higher tax outgo
Many companies will have to fork out higher tax on past M&A deals while some may renegotiate valuations of ongoing and future transactions with the budget ending Corporate India’s age-old practice on ‘goodwill’ accounting.
Info-based assessments will help reduce harassment of taxpayers, said PC Mody, CBDT chairman
Assessing officers will be able to begin inquiry based on third party information from audit or agencies, rather than anonymous information, which will reduce harassment of taxpayers and lead to reduced litigation, Central Board of Direct Taxes (CBDT) chairman PC Mody told ET.
