What are the Expectations from Budget 2020…!!

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expectations from budget 2020

Budget day plays a crucial role in everyone’s life. It contains details about the projected receivables and payables of the government for a fiscal year. In India, union budgets are more than just accounting exercise, it’s a vision document for the roadmap of the economy. It’s an expression of the government public policy. It basically informs, how the government plan to earn and sell. This year too, Finance Minister Nirmala Sitaraman is set to present her second budget. The union budget 2020 date is February 1. The two key issues in front of FM will be the current slowdown and high fiscal deficit. Recently Industry leaders submitted their demand to the FM in the wake of slower growth and demand. It’s unlikely that the government will be able to fulfill all the demand.

Pre Budget 2020

Let’s give it a look at vital things that CAN be taken care of:

  • Personal Income Tax Cut:  This is one of the most popular demands of the taxpayer. An increase in the limit under section 80C from 1.5 lakh will boost the much-needed demand in the economy, which has seen a sharp decline. If this happens, this could give a boost to the average salaried person’s income and put the demand & the supply cycle in motion. But only the slightest percentage of people expect such a radical move in place as the government has recently slashed corporate tax.   
  • Sector Specific Measures: There is no guarantee that such measures will be in place. But expectations are high that the government will announce certain measures for the specific sector, such as real estate, Power, NBFC, Agriculture, telecom and It is quite necessary to drive the overall demand in the economy. It may push the price of the long-term infrastructure bond.
  • Manufacturing, Infrastructure and Construction Boost: One of India three key sensitive sectors is Manufacturing, Infrastructure and Construction. These three sectors are interrelated to each other. Infrastructure development is critical for improving India’s manufacturing competitiveness and achieve higher growth, which has seen the lowest growth in the past 13 years. The construction sector, on the other hand, is expected to grow at 3.2 percent during the same period, which is quite low as per expectation. A boost to the construction sector will be a boost to the overall economy.  
  • Launch of a Few New Social Schemes: The government may launch a few new social schemes for the upliftment of marginalized sections of society. They may also focus on the SME sectors by developing and easing the credit facilities for small and medium businesses in order to enhance financial inclusion. 

Some of the key expectations from the budget:   

  • The auto sector expects a rate cut in automobiles, as it has seen the slowest growth last year. 
  • An increase in the distribution of money to support the rural economy through MGNREGA in order to boost rural demand.  
  • As the Government is batting for cleaner energy, they may incentivize the Electrical car sector by reducing the customs duty on lithium batteries. 
  • Decline in LGTC Tax rate in order to boost investor sentiment in the share market.  
  • A reduction in DDT Rate or change in the manner of dividend taxation by rationalizing it to the level of shareholder tax.  
  • In order to boost the demand in the economy, the government may impose tax duty rate cuts for local small and business sector employees. 
  • The budget may pave the road for enhancing the use of technology in tax compliance, in terms of filing returns and compliance. 
  • Medical expenses are one of the biggest headaches of the common man. To make it more affordable, the government should consider the exemption limit from Rs 35000 to Rs 25000 levels.  

As the Indian economy is facing some serious structural issues & slow growth rate, the government policy will be a key determinant for the future of the Indian economy and its growth story. There are various areas on which the government can focus, but it has limited space to act on all exceptions.  

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