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Expectations from 2016 Union Budget: Development is the Key Word

February 27, 2016

Union Minister Arun Jaitley will have two things on his mind when he would table the 2016 Union Budget on 29 February. Firstly, India has managed to sustain its growth rate (over 7 per cent) in this fiscal. Secondly, there’s a growing concern over weak global growth and the sharp decline in the prices of crude oil. The government has to create a cushion for itself so that it receives minimal jerk if the world economy takes a nosedive. Given this backdrop, the people of the country will scrutinise every new measure announced in the budget.
Expectations from 2016 Budget

Infrastructural Development

It’s going to be a challenge for the BJP government to ensure financing of various transformational infrastructure initiatives. The government has to walk the wise path of considering the cost factor while deciding on the road map for initial funding and capital infusion over a period of time. It has to explore possible source of finances and increase the workability of infrastructure projects.

Getting GST Passed

Implementing Make in India initiative needs significant amount of systems and mechanisms to be in place. On this note, three things should be on top of the government’s mind: introducing GST Bill, implementing unified indirect tax system and focusing on giving tax incentives to attract investors.

Reviving the Rural Economy

The 2016 Union Budget has to allay a major concern: distress in the rural region following two consecutive years of deficient monsoon. While government needs to revisit its policies on rain-water harvesting and micro-irrigation schemes to make the economy drought-proof, it also has to work on increasing farm subsidies and bring more people under the irrigation and crop insurance coverage

Implementation of Development Programmes

The urban transformation initiatives such as Housing for All and Smart Cities are yet to see a full-fledged implementation due to lack of adequate infrastructure and access to finance. On the other hand, bottlenecks need to be removed for effective implementation of Make in India, Digital India and Swacch Bharat Abhiyan. While ‘Start-Up India, Stand-Up India’ initiative was the prudent move to encourage growth of entrepreneurs in India, the 2016 Union Budget should look to waive off the capital gains tax for investment in start-ups so that foreign investment is not hard to come by.

Focus Should be on Financial Inclusiveness

The government is expected to create a road map for creating a food subsidy transfer mechanism. According to estimates, direct benefit transfer scheme for LPG can help channelise around INR 150 billion every year. Therefore, food subsidy transfer mechanism, is designed well, can lead to more financial savings for the government. Similarly, people are expecting the government to introduce measures to enhance the outreach of the Micro Units Development and Refinance Agency (MUDRA) to rural areas.

Expectations in the Domain of Personal Savings

A significant expectation from 2016 Union Budget is a change in the rates of personal taxes. People are keen on seeing a greater tax exemption in case of savings. In the 2015 Union Budget, Jaitley had effected no changes. There is a speculation that the minimum tax bracket will go up to INR 3 lakh from the current INR 2.5 lakh. Home buyers are keeping their fingers crossed as they want the government to increase the limits of tax deduction on interests charged on home loans.

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