'You may see some movement indicating a simpler tax regime with less exemptions but with fewer tax rates making life simpler for taxpayers.'
Can the finance minister manage our expectations, asks A K Bhattacharya.
'The finance ministry's decision to accept the deficit target of 4.5 per cent in 2025-2026 appears to have emanated from its endorsement of the Finance Commission's view that the Indian economy will continue to remain impacted by the pandemic, adversely undermining its growth potential,' notes A K Bhattacharya.
This Budget plans for an increase to 10.3% of GDP from 9.9%.
It is now becoming increasingly clear that rising imports have played a significant role in sustaining the buoyancy in revenues from GST, notes A K Bhattacharya.
The decline in gold imports has helped in narrowing the country's trade deficit to $106.84 billion during the eight-month period under review as against $133.74 billion in the year-ago months.
The bulk of states' revenue comes from the devolution from the Centre's divisible tax pool, GST, VAT on petroleum, and excise duty on alcohol.
In the last five years, imports from HK have more than tripled -- from $5.6 billion in FY15 to $17.1 billion in FY20. In the same period, exports declined by 20 per cent -- from $13.6 billion in FY15 to $10.8 billion (annualised) in FY20.
The Budget oration of the finance minister and the confidence with which she delivered it, along with the measures and the recent upsurge in the economy would all contribute to unleashing the storied 'animal spirits' and help the economy run on the growth path quite smoothly. Or so the government hopes, notes Shreekant Sambrani.
'This government has always been fiscally conservative. It never resorted to fiscal profligacy.'
Among the current FTAs with significant trade deficits for India, five are with countries from the 10-nation Asean bloc. Exports to the 10 economies stood at $ 37.4 billion in 2018-19, up by 9% year on year. On the other hand, imports were higher at $ 59.31 billion, up by 25% from the previous year's $ 47.13 billion.
The windfall taxes on domestic crude oil production and fuel exports will generate close to $12 billion (Rs 94,800 crore) for the government in the remainder of the current fiscal while trimming profits of firms such as Reliance Industries Ltd and ONGC, Moody's Investors Service said Tuesday. On July 1, the government imposed windfall gain taxes on the export of petrol, diesel and aviation turbine fuel (ATF), and on the domestic production of crude oil. It has also mandated exporters to meet the requirements of the domestic market first.
Ratings agency Moody's on Tuesday affirmed India's sovereign rating and upgraded the country's outlook to 'stable' from 'negative', citing receding downside risks to the economy and financial system.
'We forecast real GDP growth to moderate to 6.7 per cent in the year ending March 2018.' 'However, as disruption fades, we expect to see a rebound in real GDP growth to 7.5 per cent in the next fiscal year.'
IThe fiscal deficit target for 2020-2021 was originally set at 3.5 per cent of GDP. But the government's revenues have collapsed and its expenditure burden will only increase over the Budget estimates.' With the government having already planned for an additional borrowing of over Rs 4 trillion, the fiscal deficit for the current year would be much higher than the Budget estimate, notes A K Bhattacharya.
While most experts suggest the government loosen its purse strings and not worry about the fiscal deficit in a pandemic impacted year, it will be a tightrope walk for the government to increase spending without going overboard.
Sitharaman's Budget missed deficit target for the third year in a row, pushing shortfall to 3.8 per cent of GDP in the current fiscal as compared to 3.3 per cent previously planned.
Any reduction in devolution could aggravate the strained relations between the Centre and some opposition-ruled states on a number of issues, including CAA.
The government has been waiting for the expansion by the private sector, Finance Minister Nirmala Sitharaman said while reminding India Inc of various measures including corporate tax rate cut, policy consistency, ease of doing business, among others to facilitate investment.
The Reserve Bank of India (RBI) will make its bi-monthly policy announcement next week. The macroeconomic backdrop to this event is perhaps the most reassuring in the past several quarters.
Drink enough water, focus on your portion sizes, cut out junk food, start a walking routine, and stay consistent.
'While we note the very strong cyclical recovery in the economy, we believe there is still uncertainty over medium-term prospects.'
India's growth outlook has weakened sharply this year, with a crunch that started with the non-banking finance institutions spreading to retail businesses, car-makers, home sales and heavy industries.
Instead of conceding the demand for a cut in personal income-tax rates, Finance Minister Nirmala Sitharaman should phase out many exemptions in both personal and corporation taxes, suggests A K Bhattacharya.
Changes in global oil and gas rates matter more to India's economy than other major economies because the country imports around 87 per cent of its oil, half of its gas in the form of LNG, and over 60 per cent of its LPG.
After a contraction in the current financial year, India's economy is forecast to bounce back with a sharp growth rate of 9.5 per cent next year provided it avoids further deterioration in financial sector health, Fitch Ratings said on Wednesday. The coronavirus pandemic will lead to shrinking of the already slowing economy in 2020-21 that started in April. Fitch Ratings forecast a 5 per cent contraction in the GDP in the ongoing financial year.
While the likelihood of these states going the Lanka or Greece way may be an alarming assessment, the financial situation of some states such as Punjab and West Bengal is indeed quite weak.
Under the scheme, also called the Export Credit Insurance Scheme, the insurance guaranteed could cover up to 90 per cent of the principal and interest.
Experts pointed out the move will only help taxpayers temporarily, as the tax liability remained the same and the date for advance tax has not been extended.
The income tax department estimates total collection to be between Rs 10.5 trillion and Rs 10.7 trillion against the revised target of Rs 11.7 trillion.
'The new government will have to contend with slowing economic growth, weak private investment, anaemic exports and vulnerable external imbalances, a stressed financial system, mounting fiscal pressures (including high government debt-to-GDP ratios) and an exceptionally bad employment situation,' says Shankar Acharya, former chief economic adviser to the Government of India.
Finance Minister Arun Jaitley said the excise duty cut would have an impact of Rs 10,500 crore on central government's tax revenues.
The CDS has the option to focus on key areas of capability development to fight new generation wars or get bogged down in trying to bring cosmetic changes to humour the political leadership, asserts Brigadier Narender Kumar (retd).
While there has been a rash of growth estimate cuts, including a 0.70 percentage point reduction by the RBI last month to 6.1 per cent, the Japanese brokerage's estimate is so far the lowest.
RSS-aligned Bharatiya Mazdoor Sangh (BMS) on Monday expressed disappointment over the government's budget proposals with regard to divestment and foreign direct investment, especially in the insurance sector. The BMS, however, lauded the government for its current efforts on the massive vaccination programme, a special scheme for tea workers in West Bengal and Assam, labour oriented push on infrastructure projects in construction sector and development of five major fishing harbours viz. Kochi, Chennai, Visakhapatnam, Paradip, and Petuaghat as hubs for economic activities etc. On other Budget proposals, it said in a statement that "mixing the beautiful concept of Aatmanirbhar Bharat with FDI and disinvestment in the Union Budget is disappointing for the employees".
The measures to reduce the current account deficit should have focused far more on narrowing the trade imbalance, principally through export facilitation and linked FDI, says Nitin Desai.
According to a RBS report, 'the impact on India's current account deficit should be significant, cumulatively amounting to 1.9 per cent of GDP' provided for the full year FY14 prices for both oil and gold remain at current levels and aggregate volume gold demand remains stable.
The 30-share Sensex ended up 170 points at 20,634 and the 50-share Nifty ended up 54 points at 6,127.
The gains will be gradual as the measure will be executed over 12 months or so.
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