February , 2020
14:29 pm

Dr. H. P. Kanoria

Dear Readers,

Bharat : Bharat needs to preserve her wealth. Frequent changes in rules regulations and laws are jeopardizing investments and also tarnishing India’s image as an investment destination to the global investor community. At least Rs. 20 lakh crore of wealth so created for the generation of wealth, employment and increasing the growth of the economy is being wasted or on the brink of being wasted. Entrepreneurs are afraid to venture forth for the creation of new wealth. The fear of unwarranted investigation and criminal prosecution has them in its grip.

Budget : Finance Minister Nirmala Sitharaman, through the Union Budget 2020-21, has given several sops to boost investment, increase consumption and develop agricultural, horticultural, cattle and poultry rearing.

Direct taxes: Removal of tax on distribution of dividend by corporates will benefit the government as the amount of it net dividends from the PSUs will rise. Thus, there will be more funds available for development projects. Corporates would be in a position to save more and use that saving to reduce their debts. Tax is now payable by the recipients of dividends at the marginal tax rates applicable. So, recipients like individuals, family, trusts and association of persons will not have more funds either to invest or increase consumption for boosting economy.

New regime of tax without deduction is not beneficial for tax payers. Old regime tax on individual not only benefits them, but also boosts saving and covers risk of financial crisis in future for dependent/s. In old regime while enjoying benefits of deductions of Rs. 1.90 lakh one has to pay tax of Rs. 25,400 on taxable income of Rs. 7.5 lakh. In new regime tax payable is Rs. 39,500 on income Rs. 7.5 lakh.

Generally, people tend to spend not to save for future.

How to make the economy grow? How to boost savings? How to develop banking habits? Household savings level has dropped to 6.5% of GDP. For villagers who are illiterate or school-dropouts, they find it a Herculean task to open a bank account. There’s harassment, there are so many documents to show.

Foreign investments: Non-resident investors’ investment in certain categories of government securities will be at par with domestic investors. Limits for foreign portfolio investors for entry into the corporate bond segment have been raised. The rate of tax deducted at source has been reduced to 4% from 5% and the interest payable to non-resident Indians in respect of money borrowed in foreign currency from outside in India.

Overseas or multinational companies will be benefitted as they will have more disbursable fund for dividend, so there will be higher remittance by way of dividend to overseas draining our foreign exchange. Practically, the government should have given relief to the recipient for investment and increase consumption to boost the economy.

The announcement on total tax exemption provided to Sovereign Wealth Funds (SWFs) is likely to attract funds for infrastructure projects. For infrastructure financing, details of the projects worth ` 103 lakh crore mentioned in the national infrastructure pipeline need to be worked out.

Positive action for growth: To give relief to developers of commercial real estate whose projects have got delayed for factors beyond their control, the RBI has allowed banks to restructure loans by extending loan tenures by a year without any downgrade on the asset class. This will help ease project funding issues for delays in completion date.

Views of Economists / Industrialists / Experts  : Private sector would not be in a position to invest in infrastructure due to manifold roadblocks like land acquisition, non-payment or delayed payment by authority/undertakings/government, local leaders. Job market is not likely to improve. Entrepreneurs do not find solution to liquidity crunch despite government’s many promises and announcements. Executions are lacking. Due to slowdown of economy, debts have to be viewed positively and realistically. Cash flows at most companies are crimped. They are relying on job cuts and overall costs reduction to tide over the present challenges.

Banks are wary. Industry capacity utilisation is below 70%. India’s household saving rate has been falling. Government is depending on foreign capital inflow. The government and the RBI need to provide relief to the NBFC sector and real estate developers having large unsold stocks of houses. Payments from government  / government undertakings need to be released faster.

Horticulture : In India, 55–60% of the total population depends on agriculture and allied activities. Horticulture has a major role here. Jammu and Kashmir, Himachal Pradesh and north-eastern part of India depend on horticulture production. Total horticulture production is estimated to be 313.35 million tonne in 2019-20, from actual output of 310.74 million tonne last year. The area under horticulture crops has increased to 25.49 million hectares in 2018-19 from 25.43 million hectares in 2017-18.

Horticulture production has exceeded production of food grains. Horticulture sector contributes 54% of agricultural exports and 28% of Agro-GDP in India. This sector has grown at the growth rate of 3.6%. India is the second largest producer of fruits and vegetables in the world next only to China. In 2017-18, total food grain production was estimated at 275 million tonne, world’s largest producer (25% of global production). Fruit production was around 100 million tonne.

National Horticulture Mission was started in 2005. Foreign Trade Policy (2004-09) advocated boosting export and promoting horticultural products. The XI and XII five-year plans also emphasise accelerated horticultural growth. Prices of agricultural commodities fluctuate in accordance with their supply and demand situation which in turn is characterised by seasonality of production and marketing. India exports different types of fruits of about 188.2 thousand tonne. Brexit is not likely to have any significant immediate impact on India’s horticulture exports to Europe and the United Kingdom.

Among total horticultural exports, the European Union accounts for the largest share. In exports, significant fruits are banana and mango. Exports of fresh vegetable like onion and potato are on the rise. Karnataka is the largest exporter of roses and cashew of the country.

Horticulture has a number of advantages over agricultural crops. It can be done on dry and hilly terrain. Water utilisation is lower. Agriculture and horticulture can be combined to augment the income. Due to increase in population and division in the family, land holding is becoming smaller. On the border of the land (divided land or small land holdings), horticulture plants like papaya and coconut at the distance of ten feet can be planted. Vegetable crops at a distance of 10 to 50 feet can also be grown vertically without denying sunlight to the agri crop. Agri crops are more prone to the vagaries of nature than horticulture plants.

In the wasteland, horticulture plants like a variety of berries, lemons, coconut, dates, drumstick (high protein) can be grown. Instead of giving doles to the poor, the government can consider giving 4-10 kottah of land for growing vegetables and cattle rearing for their livelihood. Current produce of horticulture sector exceeds production of food. Government needs to provide better storage within a 50 km radius, good connectivity to boost exports. Financing on warehousing has to be encouraged. The system is present in the USA and the Netherlands. This can unleash huge opportunities for rural entrepreneurism.

One coconut tree can generate income up to Rs. 1000. In the Budget, the government has allocated Rs. 1.60 lakh crore for irrigation, agriculture and allied activity. Growing of herbal plants can be a profitable business. Aloe Vera, a wonder plant, has 25 hormones. It is a life giving plant and can be grown in dry climate and land. Several companies like Baidyanath, Dabur etc. are farming herbal plants and also marketing and promoting their farming.

Bharatvasis at the grass root level need to be motivated to promote farming of horticulture plants. This will be a great service to humanity. It will reduce poverty of rural Bharat.


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