Reduced tax burden could help increase spending due to higher disposable income of the taxpayers.
Deepanshu Mohan, Associate Professor of Economics and Director, Centre for New Economics Studies (CNES), Jindal School of Liberal Arts and Humanities, O.P. Jindal Global University, Sonipat, Haryana, India.
The Union Budget speech of Finance Minister Nirmala Sitharaman highlighted seven key priority goals as the “Saptarishis guiding through the Amrit Kaal” for this year’s fiscal outlay map:
a) Inclusive Development; b) Last Mile Development; c) Infrastructure and Investment; d) Green Growth; e) Youth, and f) Financial Sector.
Key fiscal numbers were kept in line with the broader market expectations with the fiscal deficit revised to 5.9% of GDP (the FM added that the Union government remains committed to bringing the fiscal deficit down to 4.5 per cent of the GDP by 2025-26);
Gross borrowing levels kept at 15.43 trillion rupees (which is still very high); a net tax revenue rise seen at around 11% (though the source for a difference of 4 lakhs crore in the presented tax and non-tax revenue collection outlay will need to be accessed, given how badly the government has done on its disinvestment targets so far), and the overall government expenditure driven by a higher outlay for government Capex and railways, is up about 7% of GDP.
On personal income tax, incentives assigned in terms of tax rate deductions and rebate announcements are broadly to encourage average middle-class taxpayers (who actually pay more tax annually than the corporate class in India) to subsequently move towards adopting the ‘new tax regime’.
Published in: The Quint
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