Measures to enhance sources of capital for infrastructure
05 July 2019
Budget 2019-20 proposes the creation of a Credit Guarantee Enhancement Corporation as also an action plan to deepen the market for long term bonds to be put in place.
While presenting the Union Budget 2019-20 in Parliament today, finance minister Nirmala Sitaraman further said that investment-driven growth requires access to low cost capital. It is estimated that India requires investments averaging Rs20 lakh crore ($300 billion) a year.
The finance minister further said that a number of measures are proposed to enhance the sources of capital for infrastructure financing, which among others include:
An action plan to deepen the market for long term bonds, including deepening markets for corporate bond, repos, credit default swaps etc, with specific focus on infrastructure sector.
It is also proposed to permit investments made by FIIs/FPIs in debt securities issued by IDF-NBFCs to be transferred/sold to any domestic investor within the specified lock-in period.
“We shall further simplify procedures, incentivise performance, reduce red-tape and make the best use of technology. Big structural reforms in particular, in indirect taxation, bankruptcy and real estate carried out”, the finance minister stated. The number of patents issued more than trebled in 2017-18 as against the number in 2014.
The ‘Vision for the Next Decade’ laid down in the Budget document focuses on building physical and social infrastructure; Make in India with particular emphasis on MSMEs, start-ups, defence manufacturing, automobiles, electronics, FABs and batteries, and medical devices, among others, emphasise on employment generation and growth.
Under the Interest Subvention Scheme for MSMEs, Rs350 crore has been allocated for FY2019-20 for 2 per cent interest subvention for all GST registered MSMEs, on fresh or incremental loans. Government would create a payment platform for MSMEs to enable filing of bills and payment thereof on the platform itself to eliminate delays in government payments. Further, the government would extend the pension benefit to about 30 million retail traders and small shopkeepers whose annual turnover is less than Rs1.5 crore under a new scheme namely Pradhan Mantri Karam Yogi Maandhan Scheme.
The Budget proposes setting up 100 new clusters envisioned during 2019-20, which should enable 50,000 artisans to join the economic value chain under the Scheme of Fund for Upgradation and Regeneration of Traditional Industries’ (SFURTI). Further, 10,000 new Farmer Producer Organizations are proposed to be formed, to ensure economies of scale for farmers, under the Scheme for Promotion of Innovation, Rural Industry and Entrepreneurship’ (ASPIRE).
To address human resource creation, the Budget proposes a New National Education Policy which would bring major changes in both school and higher education, better governance systems and greater focus on research and innovation. Further, there is a proposal to establish a National Research Foundation (NRF) to fund, coordinate and promote research in the country.
The finance minister stated that an amount of Rs400 crore is proposed to be provided under the head, “World Class Institutions”, for FY2019-20, more than three times the revised estimates for the previous year.
Other measures that would give a boost to the economy and employment generation would include a proposal to streamline multiple labour laws into a set of four labour codes to ensure standardization and streamlining of registration and filing of returns. Further, there is also a proposal to start a television programme within the DD bouquet of channels exclusively for start-ups, Sitharaman added.