FEBRUARY 04, 2020

By Harini Sridharan, CA

THE much awaited thematic Budget for FY 2020-21 was delivered by our Finance Minister at the Parliament with her renewed vigour after her maiden attempt last year. India, once credited as the world's fastest growing economy, is now trying to revamp its economy with rejuvenation that dipped to a 11 year low.

Interestingly, the brimming budget was woven around three prominent themes - 'Aspirational India', 'Economic development for all' and last but not the least, 'Caring Society'. This article is with a special focus on the impact that Tamilnadu has on the Budget 2020.

The Importance of Tamilnadu, the state with 4% of India's geographical area, constituting 5.96% of the Country's population of 1210 million as per the 2011 population census can never be undermined. Notably, it is a State with higher proportion of 15 to 60 age groups in total population. Hence for reaping the benefit of this demographic dividend, large investments in Social Infrastructure, Skill development and capital accumulation are the pre-requisites.

Intriguingly, Gross Value Added by Sector in FY 2017-18 reveals that Agriculture, Manufacturing and Services contributed to 13%, 34% and 53% of the total Gross value added respectively.

Agricultural Sector

Taking cue from the sayings of our wise saint poet aauvaiyar, People of Tamilnadu have always tilled our land before eating. Tamilnadu is the highest producer of bananas, coconuts, sugarcane, cotton, kambu, corn, rye, groundnut and oil seeds and the 4th largest producer of Rice. The budget for this year has allocated Rs 1.60 Lakh crores for Agriculture, irrigation and allied activities. The Government has targeted to double farmers' incomes by 2022. Comprehensive measures for total of 100 water stressed districts in India are proposed, we will have to wait for the details to see how many districts of Tamilnadu are covered. It has been proposed to include all eligible beneficiaries of PM-KISAN under Kissan Credit Card (KCC) scheme. Reliance on diesel, and kerosene has been reduced, and linking of pump sets to solar energy has been introduced in PM-KUSUM scheme of 2019 Budget. This Scheme is proposed to be provided to additional 20 lakh new farmers.

Services sector

The tertiary sector, which is the major contributor to the State economy which propelled the overall growth in the face of the farm sector having performed badly owing to drought and uneven spatio-temporal distribution of precipitation. The contributors in this Sector were mainly Trade, Hotels & Restaurants, Transport & Communication, Financing, Real Estates, Community, Social and Personal Services.

To hoist the faith of the depositor in the health of a Scheduled Commercial Bank, the Budget 2020 has increased the Deposit Insurance Coverage per depositor as Rs 5 Lakhs instead of existing Rs 1 Lakh. Various oversight measures through Reserve Bank of India are proposed in case of the Cooperative Banks for enabling sound banking with increased professionalism.

Adichanallur, an archaeological site in Thoothukudi district in Tamilnadu is proposed to be declared as one of the Iconic site of Tamilnadu. It is a recognized fact that this site as been a site of a number of very important archaeological finds.

To promote a faster connect between Chennai and Bangalore, it is proposed to launch Chennai - Bangalore Expressway soon.

Manufacturing Sector

The Vision of Tamilnadu is to have the share of manufacturing in Gross State Domestic Product as 22% in FY 2022-23. This year budget had proposed to introduce new schemes for encouraging manufacture of mobile phones, electronic equipment and semi-conductor packaging. To introduce the reliance on imports for textiles, a National Technical Textiles Mission with an estimated outlay of Rs 1480 crores has been proposed.

Scheme for reversion of duties and taxes on exported products has been proposed to be launched this year. This will improve exports.

Apart from the above, due to the introduction of goods and services tax the survey has brought out the results that savings achieved by each household is 4% of their total monthly expense. And GST implementation has removed cascading of taxes, which constituted almost 40% of total tax.

It is deemed fit to quote from the Budget speech, wherein reference from Sarga 1 Raghuvamsa by Kalidasa was cited. The activity of collecting tax by the king is compared to that of the Sun collecting vapour from little drops of water. The purpose of collecting taxes is for people's wellbeing. The vision of India becoming a super power will become a reality if the benefits rightly accrue to the deserved.

(The views expressed are strictly personal.)