LIC Divestment, Tax Change: Biz-Fin Industry React To Budget 2020

Various prominent people of the business and finance industry have spoken about the Budget.

Various prominent members of the finance and business world reacted to the Union Budget 2020 after it was presented by Finance Minister Nirmala Sitharaman in Parliament.

(Photo: The Quint)

Various prominent members of the finance and business world reacted to the Union Budget 2020 after it was presented by Finance Minister Nirmala Sitharaman in Parliament on Saturday, 1 February.

While some lauded certain initiatives, others warned of some others.

‘LIC Divestment a Big Thing’: Arundhati Bhattacharya

Former Chairman of State Bank Of India, Arundhati Bhattacharya said that the government’s plans to divest some of its stakes in the Life Insurance Cooperation of India (LIC) is a “ a very big thing”.

“It is going stare anybody in the finance sector in the eye,” she added, while speaking to Bloomberg Quint, saying that it is a step in the right direction and that she congratulates the government for the same.

The second thing, which the former chairman said caught her attention, was the Rs 5 lakh deposit insurance.

“However, depositors must be aware that this will mean paying off larger premiums by the banks. Therefore the costs of service accounts will rise accordingly, so there is a downside to this as well. The premiums will go up substantially. It will go up five times, which is not a small number,” she said.

When asked if the Budget will augment GDP growth, Bhattacharya said she doesn’t see any “big, bold steps that will quickly release animal spirits”.

Start Ups Hail Tax Changes

The Budget proposal for the start-up ecosystem, especially the one on tax on employees stock options (Esops), received a big thumbs up from start ups.

"The finance minster has delivered a fantastic budget for start ups. The measures announced on Esops, taxation and seed fund will infuse tremendous energy into the ecosystem," Indian Angel Network Chairman Saurabh Srivastava said.

The Budget recommends a five-year tax holiday on Esopss, a 10- year tax exemption for start ups with under-Rs 100 crore turnover and also talks of a seed fund to push new businesses.

Paynearby Chief Executive Anand Kumar Bajaj echoed Srivastava’s sentiments.

“Restructuring the taxation on Esops is a great breather along with definition of turnover for scaled start ups doing good work, he told PTI.

Anuj Golecha, co-founder for the platform Venture Catalysts said the ecosystem has reasons to be satisfied with the Budget announcements.

“A dedicated investment clearance cell for providing end-to-end facilitation and support including pre-investment advisory, information on land banks and quicker clearance of funds at the state-level will boost the entrepreneurship culture.”

Anuj Golecha to <i>PTI</i>

Many also said that the seed fund will support start ups in the early phases.

"The proposed seed funding support for 'ideation and development' of early-stage start ups would encourage more people to take the entrepreneurship plunge as well as support the existing start ups," said CEO of trading platform Connect2India Pawan Gupta.

Business Tycoons React

Various prominent people from the Indian business community took to Twitter to comment on the Budget.

Chairman of RPG Enterprises Harsh Goenka said the Finance Minister “had little room to manoeuvre” and has crafted a long-term strategy that will focus on important issues.

Chairman of the Marico Group Harsh Mariwala tweeted before the Budget that he was looking for the government to find innovative ways to reduce fiscal deficit.

While he didn’t comment on any other aspects of the Budget, he shared a tweet indicating that he would have liked the Budget to focus more on mental health.

Chairperson and Managing Director of Biocon Kiran Mazumdar-Shaw keenly tweeted different aspects of the Budget – and about the government’s investment in the National Science Scheme’s Genetic Data Base.

(With inputs from PTI and Bloomberg Quint)