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step by step Nirmala’s maiden Budget is all about incremental measures

Aadhaar can be interchanged with PAN to file I-T returns ₹70,000 cr. to be infused into public sector banks Those earning ₹2 cr. & ₹5 cr. will pay 3% and 7% surchargeExtra deduction of ₹1.5 lakh on loans for affordable houses

Finance Minister Nirmala Sitharaman, in her maiden Budget on Friday, sought to tackle several pain points in the economy through incremental steps rather than opting for the spectacular announcement route.

One of the biggest announcements she made was of a ₹70,000 crore capital infusion in public sector banks to be used as growth capital, now that the legacy issues plaguing the sector have been addressed.

She also announced a slew of measures to ease the liquidity and regulatory problems affecting the Non-Banking Financial Company (NBFC) sector, a key pain point in India’s economy at the moment.

The Budget incorporated a number of positive tax reforms, such as lowering the corporate tax rate for companies with an annual turnover of less than ₹400 crore and increasing the surcharge to be paid by high net-worth individuals earning more than ₹2 crore a year. It also finally provided relief for startups from the undue pain of the ‘angel tax’.

In a move that spooked bond markets, Ms. Sitharaman announced that the government would be increasing its external borrowing programme since India’s external debt to the GDP was below 5% and among the lowest globally.

Liquidity arrangements

“Non-Banking Financial Companies are playing an extremely important role in sustaining consumption demand as well as capital formation in small and medium industrial segment,” Ms. Sitharaman said. “NBFCs that are fundamentally sound should continue to get funding from banks and mutual funds without being unduly risk-averse.”

Keeping this is mind, Ms. Sitharaman announced that the government would provide a one-time partial credit guarantee to public sector banks for their first loss of up to 10% when they purchased the pooled assets of financially sound NBFCs.

She noted that the Reserve Bank of India has only limited regulatory authority over NBFCs, adding that steps will now be taken to strengthen the RBI in this regard. Housing finance companies will henceforth be regulated by the RBI.

Apart from this, the Budget featured smaller steps that would help the NBFC sector, such as doing away with the Debenture Redemption Reserve for public issues. Another provision in the Finance Bill says that if the RBI is satisfied that in the public interest or to prevent the affairs of an NBFC being conducted in a manner detrimental to the interest of depositors or creditors, it can supersede the board for up to five years.

Not holding a brief from the past

Minister replaces leather briefcase with a cloth bag to carry Budget papers

Nirmala Sitharaman arriving to present the Budget on Friday. Sandeep Saxena The Hindu

Presenting her maiden Budget, Union Finance Minister Nirmala Sitharaman on Friday broke away from tradition when she replaced the conventional leather briefcase with a bright red cloth bag to carry the Budget papers to the Parliament House.

There were other significant departures as well. The Finance Minister skipped reading the allocations to different Ministries, or the macro economic numbers like projected revenues or expenditure.

At the end of her speech that extended beyond two hours and 15 minutes, Ms. Sitharaman did inform the Lok Sabha that all the numbers had been mentioned in the annexure of the Budget document.

Speaker Om Birla praised Ms. Sitharaman for presenting the Budget as the country’s first full-time woman Finance Minister.

Prime Minister Narendra Modi was among the first MPs to walk up to the Finance Minister to congratulate her after she finished. Several other Ministers, including Rajnath Singh, Ravi Shankar Prasad, Piyush Goyal and Smriti Irani, were seen congratulating her and sharing some light moments after her marathon speech.

Interestingly, while reading out the Budget, the Finance Minister didn’t pause even to have a glass of water.

Family in attendance

And while she was reading out her speech — replete with Tamil, Urdu, Hindi and Sanskrit verses — her daughter and her maternal uncle and aunt watched the proceedings from the Speaker’s Gallery on the upper deck.

When Ms. Sitharaman walked into the Lok Sabha five minutes before the proceedings started at 11 a.m., she acknowledged their presence with a smiling nod.

Indira Gandhi was the first woman to present a Budget in 1970, when she was the Prime Minister. Her Finance Minister Morarji Desai had resigned from the Cabinet, prompting her to retain the Finance portfolio for a year.

Ms. Sitharaman’s proposals were welcomed with frequent thumping of desks by the treasury benches. Mr. Modi too joining the members. Several MPs, including Home Minister Amit Shah, were seen taking notes at regular intervals.

Political messaging guides Budget’s welfare focus

Hike in funds for women, SCs/STs points to govt.’s priorities

The first Budget of the second Modi government appeared to be of a continuum of the last with an emphasis on social welfare. This includes a bank overdraft facility of ₹5,000 for women members of Self-Help Groups (SHG) and an identification with the poor, while the rich (those with incomes between ₹2 crore and 5 crore and ₹5 crore and above) have been hit with a hike in surcharge.

Government sources said the surcharge would fetch around ₹12,000 crore and would offset the loss of ₹4,000 crore from the slashing of corporate tax. The political optics of taxing the rich is quite potent, and the government appears mindful of that.

The hike in the allocations for women (10%), the Scheduled Castes (30%) and the Scheduled Tribes (25%) is also an important pointer to the government’s priorities, one that is again full of political signalling.

Infrastructure push

There was a lot of stress on infrastructure development, including tax relief for affordable housing, with a proposed tax holiday for developers of affordable housing and an additional deduction of up to ₹1.5 lakh for interest on home loans borrowed up to March 31, 2020.

Announcements of targets for the construction of 1.95 crore houses under the Pradhan Mantri Awas Yojana (PMAY) and an allocation of ₹80,250 crore for the upgrade of rural roads under the Pradhan Mantri Gram Sadak Yojana were also made.

Much of the allocations for farmers was done in February’s interim Budget, including the Pradhan Mantri Kisan Samman Nidhi. The announcements for the farm sector this time were more on structural issues related to farmers, but nothing with the razzmatazz of February’s announcements.

The one announcement that hit a false note in this narrative was the hike of ₹2 per litre on petrol via not just hiking of prices by ₹1 but also a Road and Infrastructure Cess.

Vaiko gets one-year jail term for sedition

Conviction will not disqualify him from filing papers for Rajya Sabha poll

Defiant stance: MDMK leader Vaiko told the media in Chennai on Friday that he welcomed the verdict. B. Velankanni Raj The Hindu

In a rare conviction for sedition, Marumalarchi Dravida Munnetra Kazhagam (MDMK) general secretary Vaiko was sentenced to a prison term of one year by a special court for elected representatives here on Friday for a speech he had made in July 2009.

Mr. Vaiko is set to file his nomination papers for a Rajya Sabha seat from Tamil Nadu. The conviction will not disqualify him from the electoral contest, as he has been sentenced only to a one-year term. Only a sentence of two years and above will attract disqualification provisions under the Representation of the People Act.

Sedition, or Section 124A of the IPC, is not one of the offences that entail disqualification, regardless of the length of the prison term.

Mr. Vaiko made the speech in question on July 15, 2009, at a function to launch the Tamil version of his book I Accuse, a compilation of letters he had written to the Prime Minister about the alleged “betrayal” by the Centre in “aiding” Sri Lanka in committing “genocide” against thousands of Tamils during the last years of the war against the LTTE. He was severely critical of the regimes of the day at the Centre and in the State. In his speech he asked Tamil youth to support the formation of ‘Tamil Eelam.’

J. Shanthi, special court judge said at the conclusion of the trial that the charge of sedition had been proved.

She held that given the position of the accused in society, his speech could influence the people. She noted that the book was released and a “hate message” delivered just two months after the death of LTTE leader V. Prabakaran. Given the volatile mood of those days, there was danger to the security of the State and Central governments then.

She noted that Mr. Vaiko had said the LTTE had been defeated because of the Indian government’s betrayal. “Section 124 A IPC also attracts intention or tendency to create disorder or disturbance to law and order or incitement to violence... Whether that act resulted in violence is immaterial. The charge under Section 124 A IPC stands proved.” The judge also imposed a ₹10,000 fine.

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