Guwahati: Just a day to go, finance minister Nirmala Sitharaman will present the annual budget on Saturday for the fiscal year 2020 starting April 1. We take a look at the economic backdrop and the challenges amid which the finance minister will present the Budget, her second after she took over as the finance minister in 2018.
The budget comes at a time when India’s growth has plummeted to abysmally low 4.5% in the quarter ending September, third quarter of 2019. This is the slowest the economy has grown in six years.
The International Monetary Fund has lowered India’s growth projection this year by 1.2 percentage points from its October forecast. India, Asia’s third largest economy is expected to grow at 5.8% in 2020, behind China’s projected growth of 6%.
The Budget, also referred to as the financial statement, is expected to announce measures which would step up consumption and help get the economy back on track.
Expectations are that after slashing corporate taxes last year, finance minister Sitharaman might tinker with the personal tax brackets, a move that many experts believe will leave more money in the consumers’ hands as disposable income to spend.
How much you are paying now as personal income tax:
Up to Rs 2.5 lakh — no tax
Between Rs 2.5 – 5 lakh — 5% tax
Between Rs 5 lakh to 1 crore — 20% tax
Over Rs 1 crore — 30% tax
Industry experts however feel that slashing income tax rates would not be enough to put economy back on track.
“Bold action would be required this time. The economy is in very bad shape and the finance minister will have to take drastic steps. Maybe this time the government should not worry about what the rating agencies say and the main focus of this Budget should be on getting growth back, getting the economy back on track. The finance minister might think of reducing GST rates across the board. In 2008 during global recession, India managed to sail through because the then finance minister had slashed excise duties across the board,” industrialist and former president of FINER (Federation of Industry and Commerce of North Eastern Region) R S Joshi told EastMojo.
Budget Session begins; President Kovind addresses joint session of Parliament
The Budget Session of Parliament began on Saturday. President Ram Nath Kovind addressed the joint sitting of two Houses of Parliament.
“For making such a new India and for fulfilling the expectations of the people, my Government is working with commendable pace and decisiveness to bring about changes in every field. It is the outcome of reforms at the grassroot level ushered in by the Government in the last five years that there has been an unprecedented improvement in India’s global ranking in several areas,” President Kovind said in his address.
He spoke about India improving its position In the World Bank’s Ease of Doing Business rankings, “India has leapfrogged to the 63rd position, moving up by 79 places. In the Resolving Insolvency rankings, India has moved from 108th to 52nd position and in the Global Innovation rankings, from 74th to 52nd position. India has improved its international ranking by 10 points in the Logistics Performance Index. India has moved from 52nd to 34th position in the World Economic Forum’s Travel and Tourism Competitiveness rankings”.
Prime Minister Narendra Modi spoke to media before the budget session, and said that he is looking forward for detailed discussions on the economy and the empowerment of people.
“We should focus mostly on economic issues in this session and we should to try to see how India can benefit most out of the present global economic scenario and how it can take forward the country’s economy,” PM Modi said.
Calling for enriched discussions in both the Houses of Parliament, the Prime Minister said it should also focus on the empowerment of the people.
“Our Government is known for striving for the empowerment of all the underprivileged sections and women. We would continue to work in this direction even in this decade. I wish that both the houses have great discussions on economic issues and empowerment of people. I am confident that the discussions would be enlightening and enriching all of us’, he said.
The government will release the Economic Survey for 2019-20 will be released in Parliament on Saturday, just a day before finance minister Nirmala Sitharaman presents the Union Budget 2020-21 on February 1. Chief Economic Adviser Krishnamurthy Subramanian will present the Survey considered to be the report card on the health of the economy and a take on how the several government schemes and programmes have performed in the past year.
The first phase of the Budget session will conclude on February 11, while the second part of the session will begin from March 2 and end on April 3.