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By:

Amey Chitale

28 October 2024 at 5:29:02 am

Growth Without Fireworks

The Budget leans on tourism, technology, trade calibration and fiscal discipline to anchor growth amid global uncertainty Mumbai: The new budget positions tourism as a key driver of jobs, forex earnings, and local growth. Incentives will back indigenous seaplane manufacturing through a Seaplane VGF Scheme, while a new National Institute of Hospitality will strengthen academia-industry-government linkages. A pilot programme will upskill 10,000 guides at 20 iconic sites with IIM collaboration,...

Growth Without Fireworks

The Budget leans on tourism, technology, trade calibration and fiscal discipline to anchor growth amid global uncertainty Mumbai: The new budget positions tourism as a key driver of jobs, forex earnings, and local growth. Incentives will back indigenous seaplane manufacturing through a Seaplane VGF Scheme, while a new National Institute of Hospitality will strengthen academia-industry-government linkages. A pilot programme will upskill 10,000 guides at 20 iconic sites with IIM collaboration, and a National Destination Digital Knowledge Grid will document cultural and heritage sites. Heritage tourism will be enhanced with experiential upgrades at 15 archaeological sites, and new projects will expand the Buddhist circuit in the northeast. Seven High-Speed Rail corridors will serve as sustainable ‘growth connectors,’ boosting mobility and linking emerging hubs. Software services, IT-enabled services, KPO, and contract R&D are consolidated under ‘Information Technology Services’ with a uniform safe harbour margin of 15.5 percent. The safe harbour threshold rises from Rs. 300 crore to Rs. 2,000 crore, easing compliance for mid-sized firms. To spur investment in critical infrastructure, a tax holiday until 2047 is offered to foreign companies delivering global cloud services via Indian data centres, provided domestic customers are served through Indian resellers. This landmark measure positions modern data centres as central pillars of India’s digital economy and future growth. Key Reforms Income tax rates remain steady but introduces key compliance reforms. TCS on foreign travel and education is reduced to 2 percent, and TDS rules for manpower services have been simplified. Taxpayers can now file Form 15G/15H directly through depositories, easing coordination. Penalty provisions are de-criminalised, with many shifted to late fees. While broader capital gains rationalisation was anticipated, relief comes through treating buyback proceeds as capital gains, lowering the tax burden for recipients. Trade-friendly customs duty reforms find place instead changes rather than sweeping reforms. The duty-free import limit for seafood export inputs rises from 1 percent to 3 percent of turnover, with similar relief extended to shoe uppers. Exporters of leather, textiles, and footwear gain flexibility as the export period is extended to one year. To encourage domestic value addition in consumer electronics, specified parts for microwave oven manufacturing are now exempted. The recommendations of 16th Finance Commission have been accepted by the centre which recommended 41 percent devolution. Budget 2026 reaffirms the government’s commitment to fiscal consolidation while safeguarding social priorities. The debt-to-GDP ratio is projected to decline from 56.1 percent in 2025–26 to 55.6 percent in 2026–27, freeing resources for priority spending by lowering interest outgo. The fiscal deficit target has been met at 4.4 percent of GDP in 2025–26 and is estimated to further ease to 4.3 percent in 2026–27, in line with the path toward a 50±1 percent debt-to-GDP ratio by 2030–31. Revised estimates for 2025–26 place non-debt receipts at Rs. 34 trillion and expenditure at Rs. 49.6 trillion, including Rs. 11 trillion in capital outlay. For 2026–27, receipts are projected at Rs. 36.5 trillion and expenditure at Rs. 53.5 trillion, with net tax receipts of Rs. 28.7 trillion. The government is banking on higher RBI dividends and higher disinvestment receipts. Fiscal deficit financing will hinge on Rs. 11.7 trillion in net market borrowings, supplemented by small savings and other sources, with gross borrowings at Rs. 17 trillion. Successful execution will decide if the budget’s ambitions become reality. This year’s strategy favours actions over numbers, consolidating and reinforcing the ecosystem instead of chasing headline reforms. Amid geopolitical tensions and market volatility, it prioritises stability and durable growth over quick wins - less a Sehwag-style first-ball six, more a Rahul Dravid innings: deliberate, resilient, and built for the long haul.

BJP Boost

Updated: Oct 22, 2024

As the dust settles over the recent Assembly elections, the BJP, defying anti-incumbency prediction of political Cassandras and exit polls, is set for a historic third term in Haryana. This will buoy the party after its underwhelming performance in the Lok Sabha polls. The Haryana outcome not only reinforces the BJP’s foothold in national politics but also presents a counter-narrative to the INDIA bloc’s post-election fervour.

Despite the bogey stoked by lingering farmer protests and discontent surrounding the controversial Agniveer scheme, the BJP strategically diversified its approach, relying not solely on Prime Minister Narendra Modi’s star power—evidenced by his reduced number of rallies—but also on a ground-level consolidation of anti-Jat votes. The Congress’s over-reliance on the Jat community backfired, rallying other groups against it. Interestingly, the Dalit vote, which the Congress anticipated would tilt in its favour, has not completely abandoned the BJP.


At the forefront of the BJP's campaign was Chief Minister Nayab Singh Saini, whose relatively short tenure allowed him to distance himself from the decade-long rule of the previous administration. By introducing measures to benefit the backward classes, including a significant income limit increase for OBC employment from Rs. 6 lakh to Rs. 8 lakh, the BJP effectively shifted the narrative in its favour. Their mantra of ‘bina parchi, bina kharchi Naukri (promising jobs without bribes) resonated with voters.


The BJP’s rejuvenated team, led by key figures such as Union Minister Dharmendra Pradhan and state leaders, has seemingly addressed concerns that arose following its poor showing in the Lok Sabha elections. The incorporation of new candidates in place of established leaders provided a fresh face that contrasted sharply with the Congress’s decision to recycle incumbents.


In contrast, in Jammu and Kashmir, the National Conference, in alliance with the Congress, having crossed the majority threshold, reclaimed its historic dominance and is set to form the government. Here, the BJP’s performance in the first Assembly election held after the abrogation of Article 370, fell short despite its strenuous attempt to position itself as a proponent of development.


The electorate’s apparent rejection of hardline factions like the PDP reflects a nuanced response and win for democracy. Notably, the results have shown a significant rejection of separatist candidates, including those from Engineer Rashid-led Awami Ittehad Party and Jamaat-e-Islami, who failed to make a meaningful impact in the polls.


The BJP’s emphatic victory in Haryana redeems its Lok Sabha misstep but also signals a broader political resurgence, giving the party renewed vigour to march into future contests like the crucial Maharashtra Assembly election.

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