Whilst the finance minister may have had a ‘full inbox’ suggesting the key reforms to be undertaken in the upcoming Union Budgetfrom various stakeholders, it will be interesting to see which of the key economic and political developments that have taken place recently will be calibrated in the upcoming Budget.
Falling crude oil prices and their impact on the trade deficit, falling inflation and the recent trend of falling interest rates ” along with a robust stock market which enables fundraising by disinvestment in public sector undertakings ” certainly helps ease the pressure on the government’s fiscal balances and gives the FM some room for bolder reforms.
However, the backdrop to the Budget seems to be ever evolving.
It is time to make ‘Make in India’ a reality. Steps such as restoring the tax sops for Special Economic Zones (SEZs) by prescribing a zero/lower rate of Minimum Alternate Tax (MAT), single-window approvals for registrations and licences, incentives for promoting innovation may be considered to boost manufacturing.
Labour laws should be revisited and initiatives to develop the necessary skill sets such as ‘Skill India’ should be put into action.
A revival in consumption (both public and private) would be key to economic recovery. This could be achieved by enhancing applicable deductions and tax exemption limits in a fiscally prudent manner.
It would also be desirable to promote savings through the introduction of sector-specific, tax-free investment options for priority sectors such as infrastructure and provide separate exemption limits for the same.
