On Friday, Finance Minister of India will present her maiden budget. This phase of the Indian economy is considered to be the most crucial when growth is slowing down and are the revenues collections of the same.
The only push that has been noticed is the consumer demand which now looks vulnerable. However, there are few pointers to look for in Budget 2019-20.
Resolving Water Crisis, Supporting Rural Economy
To revive the rural demand, the government may announce more measures to improve the living and support farmers. Also, to resolve the draught scenario in the large part of the country, the government may force to take firm measures for water conservation under the new water ministry.
GDP Assumption
Since the Economic Survey has now added real GDP growth at 7% for the same year and retail inflation is firmly anchored below 4%, the 11.5% nominal GDP growth for 2019-20 assumed in the interim Budget is unlikely to be achieved. Also, while a high nominal GDP print will be looked at with suspect by analysts, lower nominal GDP growth may make it difficult to achieve the fiscal deficit target of 3.4% of GDP in 2019-20.
The Fiscal Math
Compared with the revised estimates of ₹14.8 trillion for the same fiscal year, the total receipts of the government in 2018-19 witnessed a shortfall of ₹1.46 trillion as per the provisional estimates of Controller General of Accounts. Greater reliance on off-balance-sheet borrowing and lower subsidy allocations will raise accountability on the credibility of the fiscal math.
The Tax
Though, a move that may risk alienating the rich, and a bequest or estate tax that barely pinch the well-off will not only help raise resources for the revenue famished government but also improve the optics of the Narendra Modi administration’s pro-poor credentials in its second term.
Boost Economic Growth
On Tuesday, finance minister Nirmala Sitharaman in Rajya Sabha promised that the government will take necessary immediate steps to look for the slowdown in economic growth and encourage manufacturing. In the budget, it is expected that the policy measures and incentives that the government may announce to boost the economy which is at a five year low of 6.8% in 2018-19 will be keenly watched.
