Economist expects interest cost to decline in the next financial year

“The Union Budget 2023-24 has provided significant thrust on public investment, which will support growth of construction, cement, building materials, infrastructure sectors. As a result of sharp expansion in public investment, the share of capital expenditure in total government spending will rise from 13% in FY19 to 22% in FY24. The budget will also have a favourable impact on the automobile sector given its thrust on green hydrogen and battery storage systems. Another welcome feature of the budget is its commitment to fiscal consolidation and reduce fiscal deficit so that more capital is available for private companies to borrow and invest. I expect 10-year bond yield to ease 30-40 basis points in the next six months and this will reduce borrowing cost for private companies,” said Mr. Sujan Hajra, Executive Director & Chief Economist, Anand Rathi Institutional Equity at an interactive session on ‘Implications of Union Budget 2023-24’ organized by MVIRDC WTC Mumbai.

In his remarks, Mr. Firoze B. Andhyarujina, Senior Counsel, Supreme Court of India highlighted the key direct tax provisions in the Finance Bill. Specifically, he explained the amendment in Income Tax Act provisions related to online gaming, capital gains tax on market linked debentures and capital gains on sale of property. Mr. Andhyarujina also discussed about the amendment in section 43B of the Income-tax Act which provides tax disincentive for companies delaying payment dues to micro and small enterprises.

Mr. Rahul Renavikar, Managing Director, Acuris Advisors Private Limited explained the key budget provisions for micro, small and medium enterprises (MSMEs). He suggested MSMEs to avail of the Vivad Se Vishwas II Scheme for voluntary settlement of contractual disputes with government and government agencies. Also, Mr. Renavikar suggested existing exporters and aspiring exporters to avail of incentive under the newly introduced SPIC (Studies, Publicity and International Cooperation) scheme, where the government offers subsidy for marketing expenses incurred by MSMEs abroad. The Union Budget 2023-24 has allocated Rs. 36.07 crore towards this scheme for the next financial year. Mr. Renavikar raised concern about the Finance Bill provision which introduced penalty Electronic Commerce Operation (ECO) under specified situations. He said this provision can hold the e-commerce marketplace entities liable for any offence committed by sellers on this platform and hence these entities should carry our necessary due diligence about the sellers on their platforms.

Earlier in his welcome remarks, Dr. Vijay Kalantri, Chairman, MVIRDC World Trade Center Mumbai and President – All India Association of Industries pointed out, “I hope the budget has enough positive announcements to promote economic growth and employment. The government has rightly increased allocation for infrastructure, railways, green energy, electric vehicles and natural farming which will not only support GDP growth, but also sustainable growth.”

Speaking about the pending government reforms to support ease of doing business, Dr. Vijay Kalantri pointed out, “It has been more than five years since the implementation of GST and this is the time to simplify the system by reducing the number of tax slabs, bringing real estate and fuel under the GST net to boost housing sector and rein in inflation. India needs a simplified tax system that will reduce cost of compliance and incentive for tax evasion.”

The event was attended by members of trade & industry, tax professionals, self-employed entrepreneurs, members of academia and financial institutions.