India is ready to unveil Budget "like never before" on Monday, February 1. The countrymen are awaiting the moment when Union Finance Minister Nirmala Sitharaman will rise up in Parliament to present the ninth budget under the Modi government. In her first budget in 2019, Sitharaman had replaced the decades-old leather briefcase used for carrying budget documents with a traditional red cloth 'bahi-khata'. Economists and experts say that the budget will be the starting point for picking up the pieces after the economic destruction caused by the COVID-19 pandemic. And it must go beyond being just a 'bahi khata' or a ledger of accounts, as well as canning old schemes in a new bottle. It has to be a vision statement, a roadmap to get the world's fastest-growing major economy back on track, they say. While the pandemic is showing signs of being less virulent, a gradual progress in the vaccination programme is fuelling hope for a better future. A sustainable economic revival will need a policy catalyst. That's where this budget assumes a special relevance.
- It is expected that the budget will provide relief to the pandemic-hit common man as well as focus more on driving the economic recovery through higher spending on healthcare, infrastructure and defence amid rising tensions with neighbours.
- The budget is widely expected to focus on boosting spending on job creation and rural development, generous allocations for development schemes, putting more money in the hands of the average taxpayer and easing rules to attract foreign investments.
- Among the most-watched figures in the budget would be the expenditure on vaccination in FY22 which could be shared among the central government, state governments and households.
- Also, to be watched is the revenue that the government is projecting to receive from the privatisation of companies such as Bharat Petroleum (BPCL), Air India and Shipping Corporation of India (SCI).
- Market borrowings are expected to remain elevated and external deficit financing would increase.
- Higher capital expenditure outlay for National Infrastructure Pipeline (NIP) programme that has an aggregate investment target of Rs 111 lakh crore over the period 2020-25 and making recently introduced Production-Linked Incentive (PLI) scheme more attractive to lure foreign manufacturers to boost domestic manufacturing are top expectations from the budget.
- The budget will have to address a number of issues - health infrastructure, reviving demand, banking sector reforms, fiscal consolidation and implementation of 15th Finance Commission report, said Brickwork Ratings.
- Centrum said, "We expect the upcoming budget to prioritise growth-oriented measures with the commitment to warrant that the momentum of recovery seen in the economy recently remains sustainable." The emphasis of the budget is likely to be on the revitalization of durable consumption impulses at the current juncture as the supply-side measures have already been implemented. Alongside, the key focus will also remain on the further fostering of private investments as well after the initiation of a slew of measures like corporate tax rate cut, NIP and PLI scheme on this front, it said.
- Amidst a plethora of market expectations around the budget FY22, key areas where the central government is highly anticipated to put its more attention to are the establishment of a bad bank to clean up bank balance sheets, presenting finer contours of the PLI scheme for boosting manufacturing for the 10 sectors announced earlier and resources likely to be made available. Others include offering sops to reinvigorate household consumption demand via tax incentives for spending and higher deductions on housing loans coupled with the introduction of a COVID Cess that is expected to be levied on high-income individuals, it said.
- India Ratings and Research believes that the major focus of the government to revive the COVID-19 battered economy has till now been on the supply side, but it is high time to change gears and focus on the demand side as well, lest the ongoing recovery begins to lose steam.
- Its budget expectations include spending on infrastructure especially that are employment-intensive and have a shorter turnaround time, creation of development financial institutions, continue with relief/income support to the households who are at the bottom of the pyramid and higher allocation to MGNREGS as it provided a safety net not only to rural households but also to the workers who migrated back to rural areas.
- Also, more support to real estate given its backward-forward linkage in the economy especially affordable housing segment, boosting micro small and medium enterprises, reprioritisation of both revenue and capital expenditure towards essentials such as top priority to mass vaccination/public health, reprioritisation of expenditure and mobilisation of higher non-tax revenue, it added.
- Gargi Rao, Economic Research Analyst at GlobalData, said, "The expectations from the upcoming budget are mainly inclined towards infrastructure development, tax concessions for elderly to provide a breather for consumers to increase their overall consumption, along with increasing domestic production."
- The budget will come as an economic vaccine for the pandemic-battered economy and steer India with the much-needed stimulus to boost demand, consumer confidence and at the same time boost the purchasing power of the people, the Indian Chamber of Commerce (ICC) said, adding incentives to industries like textiles, apparel, leather, food processing, construction and retail are expected. (With PTI inputs)