Budget 2020: Middle class hopes for tax relief

Mangalore Today News Network

New Delhi, Feb 01, 2020: Finance Minister Nirmala Sitharaman will present the Budget 2020 in the Lok Sabha at 11 am on Saturday. This will be Sitharaman’s second Budget and speculations are rife that the Union Finance Minister would announce robust measures to restore economic growth and put Indian economy on the path for achieving the target of USD 5 trillion economy by 2025. It may be recalled that Sitharaman had announced corporate tax cuts in September 2019, raising hopes that while presenting Budget 2020, she would make an announcement about reduction in personal income taxes, Zee reported.

 

Going by the people’s expectations, sops for rural and agriculture sectors as well as an aggressive push on infrastructure spending are likely to be part of Finance Minister’s "feel-good" second General Budget.

Experts maintain that Sitharaman is expected to pull out all stops to spur consumer demand and investment at a time when the country is facing the worst economic slowdown in more than a decade. Union Budget 2020-21 could not have come at a worse time for the government, as the economy faces high inflation, along with subdued growth and low job creation. Accordingly, these factors make the Union Budget presentation a unique affair, as economy watchers and investors eye the financial document for a stimulus package and further reforms to arrest the slowdown cycle.

According to economists, the Union Budget will be gauged by its ability to pass on some liquidity to the masses to restart the consumption cycle and to usher in investments. Investments have failed to pick up despite corporate tax cuts and other stimulus measures, higher FDI inflows, plans to consolidate state-owned banks and monetary easing.

It is likely that Sitharaman would also make some announcements for sectors such as renewable energy, e-vehicle, power, affordable housing, real estate, and exports. Financial markets are expecting relief on Securities Transaction Tax (STT), Long Term Capital Gains Tax (LTCG) and removal of dividend tax.

Capital infusion in public sector banks and liquidity measures for Non-Banking Finance Companies (NBFC) would also be high on Sitharaman’s agenda as the Budget is expected to reaffirm the focus on infrastructure spending after the rollout of an ambitious National Infra Pipeline (NIP) in December.

Social sector schemes such as rural electrification, MGNREGA, healthcare, education and skill training may also find mention in the Budget. However, all such measures would come at the cost of fiscal slippage.