India is currently in the second half of the fiscal year 2019-2020 (FY20). The Reserve Bank of India had projected the growth of India’s GDP for this year at 6.9%. However, India’s economy hit a rough patch as the growth in the economic output depreciated to 4.5% in September 2019, the slowest since March 2013. RBI in its August meeting reduced the projected GDP to 5 per cent in December 2019.
As per the reports, in the last Budget, the FM had revised the fiscal deficit target to 3.3 per cent of GDP, but now it seems that the government will miss this target. India needs a sustained growth path over the next five years to achieve the $5 trillion economy target. India was surprised with a $20 billion fiscal stimulus package in September, which mostly focused a Corporate Tax cut. The upcoming Budget is indeed a difficult challenge for Finance Minister, Nirmala Sitharaman.
Focus Points of Budget 2020:—
- According to PM Modi’s, tourism, urban development, infrastructure, and the agri-based industry can boost the economy, providing mass employment. Global investments in real estate, defence, insurance, pension funds, signing of Free Trade Agreements, “labour-intensive” industries like construction, housing, road-building, irrigation, Sector-specific measures like telecoms, discoms, non-banking financial companies can also help.
- The government is expected to lay primary focus upon private investments, economic growth, and tax incentives mainly for start-ups and entrepreneurs, rather than former welfare schemes, as per sources. It aims at improving revenue by increasing demand and consumption to recover fiscal deficit as well as trigger investment.
- Infrastructure companies discussed with FM Sitharaman seeking finance for affordable housing and real estate to stimulate demand for cement and steel. They also urged the Centre to provide exemptions from cross-subsidy and transmission charges for boosting renewable energy, setting up clean energy units, bringing in captive renewable energy policy.
- Experts believe that a probable solution of tackling the current economic crisis is to allow more money to the customer by cutting down personal Income Tax which could be spent in more consumption, thereby increasing demand. Rakesh Jhunjhunwala, a billionaire investor, expects abolition or revision of LTCG Tax and retail in public participation in the market.
- PM Modi met economists and experts at NITI Aayog to discuss about reviving the economy and achieve the $5 trillion target. As per sources, the speakers put forward their views regarding credit expansion, exports growth, governance of public sector banks and job creation.
- Healthcare sectors expect the Budget to focus on preventive healthcare, standardise the market and create a regulatory framework for the industry to remove differential pricing and quality issues that exist in the sector.
- As per the reports, the upcoming budget to be presented by Finance Minister should be developed keeping in mind the penetration potential that the sector has especially to the interior geographies of the country while the critical concerns would be to simplify GST for e-commerce vendors and bring more parity among offline and online vendors.
Taking all these expectations into consideration, the budget announcement scheduled on February 1, 2020, will be a crucial presentation which will determine how the $5 trillion economy target of the government’s will be achieved.
