Finance Minister Nirmala Sitharaman will on Friday become the first full-time woman finance minister to announce the Budget in the Parliament -- after Indira Gandhi. From the FMCG bigshots to the youth struggling to find a job, all eyes will be at Sitharaman.
Additionally, the budget will be the first of the Modi 2.0 government.
The last budget was presented by Piyush Goyal, who was filling in for the then finance minister Arun Jaitley, on February 1.
Since this is only the second budget in five months, only a few minor alterations are expected on Friday. It will, however, be interesting to see how Sitharaman brings her touch to the economic policies of the nation.
Trade pundits are of the opinion that Team Sitharaman main agenda would be how to boost the GDP and bring India’s growth back on track and beyond 7 per cent.
IndiaTVNews.com brings to you a list of various expectations by different sectors as far as Budget 2029-20 is concerned.
FMCG and Automobile Sector
Both -- FMCG and automobile sectors -- have underperformed in the recent past. The major blame for this poor showing has been pointed towards the Goods and Services Tax. The two sectors as a whole are hence hoping for some reforms in the GST.
As per reports, financial results of 304 companies for the fourth quarter (January to March 2019) registered a fall in revenue from 20.1 per cent in the previous quarter (October to December 2018) to 10.7 per cent.
Stocks of these sectors have also underperformed. On a YTD (year-to-date) basis, the Nifty Auto index has slipped 13 per cent, while the Nifty FMCG index has slipped 3 per cent.
A clear evidence of the economic slowdown is visible in the auto sales for the past few months. Combined sales of top six passenger vehicle makers dropped 16.3 per cent to 206,115 units in June 2019, as compared to the June 2018, data shows.
The interim budget introduced the income support (PM-Kisan) scheme which would provides farmers with an assured income support. The agricultural sectors would be hoping for the same to continue in the July 5 Union Budget and better implementation of the scheme already announced.
Under PM-Kisan yojana, every farmer would get Rs 6,000 per annum in three equal instalments.
Landless farmers will not be benefitted from this scheme.
The rural sector will also be hoping for some relief by easy credit terms.
The Union Budget will have to address the pain of the banking sector which has taken a major hit with India’s economy dropping to a 5-year low at 6.8 per cent. In the interim budget, public sector banks had received Rs 1.6 lakh crore that helped five banks come out of the PCA framework and many expect finance minister Nirmala Sitharaman to announce a further relief in the Budget.
Reduction of corporate tax rate to 25 per cent for banks is also long overdue and needs to be rolled out.
One of the key points of concern for the government should be the shortage of employment opportunities. The country is at an all-time low as far as the jobs are concerned.
The government has been on the target as it has failed terribly in providing enough jobs. Therefore, the government might take some major steps by focussing more on the labour intensive industries, which will create more jobs in the country.
According to a recent NASSCOM-Zinnov report, India has emerged as the third biggest startup hub in the world and received a total funding of $4.3 billion in 2018. Indian startups have created over 40,000 jobs during the same period and many are also expanding into foreign markets.
The corporate tax reduction is one of the talking points of this Union Budget. The government had reduced the corporate tax in the interim budget.
In the upcoming Budget, the government can consider providing interest deduction up to Rs 2 lakh separately for each of self-occupied properties, i.e. a total deduction of up to Rs 4 lakh for two self-occupied properties.
Alternatively, the deduction limit for the first self-occupied property can be increased from Rs 2 lakh to Rs 3 lakh. The tax savings on account of such additional deduction will provide the required liquidity for additional investment through mortgage in the affordable housing sector.
In India, over 3,134 crore digital transactions were done during 2018-2019, according to Digital India’s official Twitter handle. From RuPay alone, about Rs 1 lakh crore worth transactions were completed during the same period while the same stood at Rs 8.8 lakh crore via BHIM UPI.
Massive results have also been recorded from BHIM, IMPS, NACH, NFS, CTS, Bharat Billpay and NETC among others.
The govt may also bring in some changes to promote its policy of digital India wherein, they might put some levy on cash withdrawals so that people rely more on digital transactions.
On the other hand, to incentivise digital transactions among small traders, the government can bring in some benefits for small traders by reducing the presumptive tax rate in case of digital transactions.
The defence sector witnessed a historical increase in the Interim Budget 2019, where a record allocation of Rs 3 lakh crore was announced by the Interim finance minister. It was the first time that the country's defence budget crossed the Rs 3 lakh crore. Along with this, a substantial hike in the military pay service was also announced in the previous budget.
The defence Budget has been lingering around the 1.5 per cent GDP mark in recent years. However, defence experts still want the defence budget to be around 3 per cent of the GDP owing to the security threats from neighbouring countries like China, Pakistan. India also needs to take effective steps to bring modernisation in the military. Steps can be taken to bring modernisation with regard to this aspect as well.
Deductions under section 80 C has been in constant demand. It could be raised from Rs 1.5 lakh to 2 lakh or even more.