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.
'You may see some movement indicating a simpler tax regime with less exemptions but with fewer tax rates making life simpler for taxpayers.'
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.
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.
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.
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.
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.'
Finance Minister Arun Jaitley said the excise duty cut would have an impact of Rs 10,500 crore on central government's tax revenues.
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.
'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.
'While we note the very strong cyclical recovery in the economy, we believe there is still uncertainty over medium-term prospects.'
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.
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.
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 30-share Sensex ended up 170 points at 20,634 and the 50-share Nifty ended up 54 points at 6,127.
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.
The gains will be gradual as the measure will be executed over 12 months or so.
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.
'On the tax front, most of the Budget proposals are sensible'.
Jaitley's fiscal arithmetic, Crisil said, is "shaky", and the scope for fiscal slippage "remains high".
President appealed to Congress to pass the budget while pushing Republicans to agree to hike the borrowing limit.
US President Barack Obama has stepped up his personal engagement with lawmakers over the government shutdown, which the White House hoped would help in resolving the current economic crisis including the one of raising the debt ceiling by October 17.
Drink enough water, focus on your portion sizes, cut out junk food, start a walking routine, and stay consistent.
The recommendation to slash duty was made by the Bharatiya Janata Party to ease retail prices of petrol and diesel.
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".
S&P has maintained a stable outlook on the basis of their expectation that over the next two years the growth will remain strong and India will maintain its sound net external position and fiscal deficit will remain elevated but broadly in line with their forecast.
In fact, no other recent Union Budget has held so much significance for the Indian economy as the one to be presented in about six weeks from now, notes A K Bhattacharya.
Never before in post-reforms India have Union Budgets seen a steady reduction in fiscal deficit for five consecutive years, points out A K Bhattacharya.
The brokerage said the consolidated fiscal deficit, including that of the Union (3.6 per cent), the states (2.6 per cent) and the off-budget borrowings which are being resorted to increasingly is a worry.
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.
'Should the most important part of economic reform not comprise the way we look at the fiscal deficit?', asks T C A Srinivasa Raghavan.
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.
The minutes of the December MPC meet reveal members felt the current spike in the headline inflation rate was due to a temporary supply shock on the food front, expected to moderate by the second quarter of 2020-21.
Companies in China, South Korea and Indonesia pay 25 per cent tax, while those in Malaysia pay 24 per cent. Only Japan has a higher tax than India at 30.6 per cent. Hong Kong has the lowest corporate tax rate of 16.5 per cent while Singapore has 17 per cent rate and Thailand and Vietnam levy 20 per cent tax on companies.
Faced with revenue shortfall, Railway Minister Mallikarjun Kharge is likely to refrain from announcing many populist measures in the interim budget on February 12.
CARE Ratings, in a report, said it foresees an increase in the retail prices of petrol and diesel in the coming few days, depending on how the oil markets react in the reduction in supply from the cartel.
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.
