Budget 2017: Tough job
for finance minister of meeting too high expectations
The GDP growth forecasts have been affected by demonetisation, which in turn has led to high expectations of a budget which will cut taxes, incentivize savings, raise more revenue, be anti-inflationary and push growth President- Retail Distribution, Religare Capital | Capital Expertise: Equity - Fundamental Jayant Manglik Religare SecuritiesSomeone famously said that the budget is not just a collection of numbers but an expression of our values and aspirations. The first major sign of change a few years ago was in shifting the time of the budget from evening to morning. It was traditionally read out in the evening so that the British could follow it in London. now the budget will be presented on 1st February to enable more time to implement the provisions.
Third, the railway budget will now be a part of the main budget. Since this budget will be launched in the shadow of demonetization, it could be an important inflection point if the government decides to be brave. The GDP growth forecasts have been affected by the move, which in turn has led to high expectations of a budget which will cut taxes, incentivize savings, raise more revenue, be anti-inflationary and push growth, all at the same time. By any yardstick, it is a tough job. But some direction is clear from the previous two budgets. For example the government has already stated that its intention is to double farmers’ income by 2022 and this budget will articulate the next steps aimed at this. Secondly, the MSME segment, which bore the brunt of demonetization because of its dependence on cash transactions, will definitely be favourably addressed in the budget. Also sure is more budget allocation for Make in India, Digital India and Swachh Bharat. All three will be part of the government’s continued focus in future budgets as well.
Digital India can look forward to additional plans, ideas and allocations because it ties in well with the aim of moving India away from cash. Job creation and revival of the investment cycle, both will receive major attention in the budget. This is important economically, socially as well as politically. On the tax front, there are expectations of moves to neutralize the pain of demonetization by lowering income taxes or increasing tax slabs. However this will have to be done in a revenue-neutral way i.e. to the extent of the new revenue which will come in due to the extended tax net thanks to demonetisation and the data collected by the government. And while corporate taxes may be tinkered with, service tax may be hiked for alignment with the GST rates which is expected to be implemented within six months
Budgets are guidelines but do not stop you from spending more than you should. However that restraint is necessary. So meeting the targeted fiscal deficit of 3% and at the same time pushing growth will need an earnest attempt and extreme discipline on the government’s front. All industry demands are fundamentally focussed towards increased business, whether through lower costs, taxes or higher incentives. The financial services industry too could do with a removal of STT and CTT as it will promote growth. And yes, there is this rumour that long term capital gains benefit will be changed to 3 years, a very bad idea. As they say, if it ain’t broke don’t fix it! Instead the best thing this budget can do is push the equity cult which will fund our growth over the next decade.
There is a need to attract people to the equity market. It constitutes just 5% of the average Indian family’s financial wealth, compared to more than 40% in the US. To enable mass outreach, entry barriers have to drop or disappear. The success of the Jan Dhan Yojana can be built upon for value addition and wealth creation. Our citizens should have the ability to fund the country’s growth and profit substantially from it. The government is clearly focused towards long-term growth. I expect a budget which lives within its means, accounts for what is truly required and provides support to all sections which need it.....
Read more for Best Stock Tips - http://bit.ly/ace_services
The GDP growth forecasts have been affected by demonetisation, which in turn has led to high expectations of a budget which will cut taxes, incentivize savings, raise more revenue, be anti-inflationary and push growth President- Retail Distribution, Religare Capital | Capital Expertise: Equity - Fundamental Jayant Manglik Religare SecuritiesSomeone famously said that the budget is not just a collection of numbers but an expression of our values and aspirations. The first major sign of change a few years ago was in shifting the time of the budget from evening to morning. It was traditionally read out in the evening so that the British could follow it in London. now the budget will be presented on 1st February to enable more time to implement the provisions.
Third, the railway budget will now be a part of the main budget. Since this budget will be launched in the shadow of demonetization, it could be an important inflection point if the government decides to be brave. The GDP growth forecasts have been affected by the move, which in turn has led to high expectations of a budget which will cut taxes, incentivize savings, raise more revenue, be anti-inflationary and push growth, all at the same time. By any yardstick, it is a tough job. But some direction is clear from the previous two budgets. For example the government has already stated that its intention is to double farmers’ income by 2022 and this budget will articulate the next steps aimed at this. Secondly, the MSME segment, which bore the brunt of demonetization because of its dependence on cash transactions, will definitely be favourably addressed in the budget. Also sure is more budget allocation for Make in India, Digital India and Swachh Bharat. All three will be part of the government’s continued focus in future budgets as well.
Digital India can look forward to additional plans, ideas and allocations because it ties in well with the aim of moving India away from cash. Job creation and revival of the investment cycle, both will receive major attention in the budget. This is important economically, socially as well as politically. On the tax front, there are expectations of moves to neutralize the pain of demonetization by lowering income taxes or increasing tax slabs. However this will have to be done in a revenue-neutral way i.e. to the extent of the new revenue which will come in due to the extended tax net thanks to demonetisation and the data collected by the government. And while corporate taxes may be tinkered with, service tax may be hiked for alignment with the GST rates which is expected to be implemented within six months
Budgets are guidelines but do not stop you from spending more than you should. However that restraint is necessary. So meeting the targeted fiscal deficit of 3% and at the same time pushing growth will need an earnest attempt and extreme discipline on the government’s front. All industry demands are fundamentally focussed towards increased business, whether through lower costs, taxes or higher incentives. The financial services industry too could do with a removal of STT and CTT as it will promote growth. And yes, there is this rumour that long term capital gains benefit will be changed to 3 years, a very bad idea. As they say, if it ain’t broke don’t fix it! Instead the best thing this budget can do is push the equity cult which will fund our growth over the next decade.
There is a need to attract people to the equity market. It constitutes just 5% of the average Indian family’s financial wealth, compared to more than 40% in the US. To enable mass outreach, entry barriers have to drop or disappear. The success of the Jan Dhan Yojana can be built upon for value addition and wealth creation. Our citizens should have the ability to fund the country’s growth and profit substantially from it. The government is clearly focused towards long-term growth. I expect a budget which lives within its means, accounts for what is truly required and provides support to all sections which need it.....
Read more for Best Stock Tips - http://bit.ly/ace_services
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