Coronavirus created havoc all over the world. Since the first lockdown in March 2020, all the industries have suffered major losses. Our economy that was already at a decline from the last four years, dipped even further due to the virus.
Nirmala Sitharaman, Finance Minister, came out with Rs 20 lakh crore economic package in May 2020 to boost the economy and bring liquidity in the market. Now that the economy has begun to come back on track, everybody is keenly looking forward to the Budget 2021 and hope to get relief in some or the other way.
If we talk about the agriculture sector, India is an agriculture-driven economy and farmers have just one expectation, not from the 2021 budget, but in general to revoke the three contentious farm laws.
Apart from agriculture, industries like pharma, automobile, entertainment, e-commerce, hospitality and real estate have also suffered heavy losses and are under debt. TBC spoke to the leading authorities in the respective industries and here are their expectations from the Finance Minister’s hardbound briefcase.
The real estate sector contributes to about 6-7 per cent of India’s total GDP. According to a report by KPMG, the real estate sector faced a loss of roughly Rs 1 lakh crore due to the lockdown induced by COVID-19. The sector is estimated to roughly double its contribution to the GDP by 2025 and provide employment opportunities to over 75 million people by 2022. A sector which has so much potential to contribute to the growth of the country can’t be ignored.
Knowing very well that the purchasing capacity of the buyer in Indian market has gone down substantially, Satish Magar, President of Confederation of Real Estate Developers’ Associations of India (CREDAI), is expecting a decrease in interest rate for the buyer. He said “The interest rate deduction for the home buyer. Currently, it is Rs 2 lakhs and should be taken up to Rs 5 lakhs. Instead of area criteria, it should be the cost criteria for an affordable house.” He further added, “Because for 45 lakhs, in a smaller city, you can get a larger house but now it should (according to) area and price. In metro cities Rs 45 lakh is a (relatively) small amount where the limit could be extended.”
Satish Magar, President, Confederation of Real Estate Developers’ Associations of India (CREDAI)
According to Magar, another hope that the sector is holding on to is, “GST input tax credit. (The) real estate is the only industry where we don’t get Input Tax Credit. But that won’t be a part of the budget, because it has to go to the GST council but that is also one demand that we’ve specified for very long. That the Input Tax Credit should be given for GST and not the 5 per cent we are getting now.”
According to Investindia.gov.in, it is estimated that by 2021 India will become the world's third largest passenger car market. In fiscal year 2018-19, passenger vehicle sales rose by 2.70 per cent and two wheelers by 4.86 per cent if compared with FY 2017-18. Sanjiv Kumar Jalan, Head Corporate Audit & Governance, Minda Corporation Limited, expressed his expectations from the Union Budget 2021 vis a vis, “Bring petroleum products under GST regime, increase in customs duty on import of auto parts, introduce of export benefits, and promotion of EV industry.” He elaborated on ‘products under GST regime, he said, “There is a significant tax cost incurred in procuring petrol or diesel for ‘business operations.’ Bringing such petroleum products under the GST regime will boost the sector and will smoothen the tax chain.” Jalan further explained, “To promote the domestic industry, it is imperative that basic customs duty is increased on import of auto parts. This will further the domestic production and the growth parameters.”
Sanjiv Kumar Jalan, Head Corporate Audit & Governance, Minda Corporation Limited
Explaining the need to introduce export benefits in the budget, he further added, “Restriction of benefit under Merchandise Export from India Scheme (MEIS) caused a lot of turbulence, as export pricing was factored keeping in mind availability of MEIS. To cover-up the loss, the government must consider granting benefits similar or even higher under the new scheme [i.e. Remission of Duties & Taxes on Exported Products (‘RoDTEP’)] which has been brought into force from January 1, 2021. Similarly, there is a lot of research and development (R&D) work that auto component companies do for OEM’s outside India. Such R&D work was getting benefit under Service Export from India Scheme (SEIS) of the Foreign Trade Policy. Government has not notified the benefit under SEIS for FY 2019-20 onwards. It is imperative that the Government notifies the SEIS scheme and must bring special rates for R&D done in the auto sector.”
Standard internal combustion engine models, or ICEs are the talks of the past now. Every automobile manufacturer is looking forward to building infrastructure for electric vehicles. Currently, electric vehicles in India are not affordable for everyone but as the infrastructure improves, the industry will see a huge shift. It is expected that by 2030, the majority of the cars manufactured will be electric. This will obviously be facilitated if the Budget also provides a nudge to this section of the industry.
Talking about the need to promote the EV industry in budget, Jalan further adds, “Further concessions (can) be offered to the electric vehicle industry to boost investment in the sector.”
According to the World Travel and Tourism Council, tourism generated about ₹16.91 lakh crore (US$240 billion) of India's GDP in 2018 that is 9.2 per cent. The sector also employed about 42.673 million people that is 8.1 per cent of the total employment in the country.
According to , India recorded a 12 per cent decrease in hotel occupancy over the first week of March, last year. However, there was a 43 per cent decline in the following week and of course, the numbers further dipped in the third week, and further to 67 per cent thereafter. After the announcement of Janata Curfew on 22 March, the occupancy decreased more than 80 per cent, resulting in obvious loss for the industry.
An industry which is providing livelihood to 8 per cent of the total jobs and has been hit so hard by the pandemic is now looking forward to some help from the government though the Budget.
Shivanand Shetty, President, Indian Hotel & Restaurant Association (AHAR), said, “The seven months of lockdown has dealt a huge blow to the industry. In fact, many restaurants have not opened yet – either they are permanently shut or waiting for the right time to open.”
Expressing the industry’s expectations from this year’s Union Budget, he added, “Based on the current scenario, our expectations from the Union Budget is that there should be no late fees and interest levied on VAT & GST payment / returns filing up to March 31, 2021. As there was no business during the period, we request a waiver of interest on existing loan/CC (working capital) / OD balance as on March 20, 2020 for a year. We also expect compensation for loss of profit during the lockdown - in the form of section 80 deduction under IT Act for FY 20-21 (AY 21-22). Waiver of VAT / GST on gas consumption and fixed charges on electric bills and also doing away with professional tax / ESIC for employer / Employee for at least one year, will help in keeping the operational cost in check.”
Even after the hospitality industry opened its door, there is no influx of customers. Due to the pandemic the public is still largely observed to be hesitant, despite the implementation of COVID-19 regulations.
The coronavirus induced lockdown majorly impacted the entertainment industry. It was the biggest shutdown of the entertainment industry. Even after resuming, the industry faced a lot of problems due to the rules and regulations put by the government. From shooting wearing a mask to limitations put on the gathering of people, the industry had a very tough time surviving the pandemic. Even the entertainment industry is hoping to get relief from the upcoming Union Budget 2021.
Abhishek Pathak, Director and Producer at Panorama Studios says, “I think cinema is our country's soft power and people across the world are its consumers. With that said, I think we should give it its due as one of the most powerful economic influences. It would be nice to have a relatively relaxed tax structure that would offer an impetus to the content creators to try out diverse production possibilities. These kind of concrete relaxations are only possible in the foreseeable future when the industry stands united for it. In this year, the government has shown unprecedented support to the entertainment industry as far as the laying down of the standard operating procedure for shooting is concerned. I am hopeful the Union Budget of 2021 will put a positive spin to the direction of entertainment.”
Every year people eagerly await for the budget as they hope to get help from the government. But this year, people have even higher expectations as the pandemic has had a scarring effect on the economy. Various industries are now hoping that the budget will ease it’s policies to facilitate an increase in the end-customer’s spending for the financial year 2022.