What industries and markets can expect from ‘like never before’ Budget?

Finance Minister Nirmala Sitharaman will announce the Budget FY2021-22 on February 1, 2021. The FM has already raised expectations by promising a budget “like never before”. If it truly turns out to be “like never before”, we will have the opportunity to rejoice like never before.

With the world’s largest immunisation programme currently underway in the country, this is the right time further accelerate efforts to revive the economy. According to a survey by Ficci and Dhruva Advisors, India Inc expects the government to continue with its policy focus on strengthening the manufacturing ecosystem, promoting research and development, and incentivising futuristic technologies in the upcoming budget.

This year we can witness the extensive budget shortfall ever, even when the growth trajectory has turned positive and the economy is looking lost in the revenue is due to the expenditure cuts. In terms of budget estimates, this year’s expenditure would be the decade’s lowest.

Demand has improved in a few sectors of the economy, but there is a need to watch this trend to see if the improvement continues in a sustained manner.

Enhancing Sec 80c limit to Rs 2.5 lakh will help boost savings, as also augur well for the housing sector. Similarly, a higher Sec 80D limit will strengthen medical coverage in our country.

Production-linked incentives (PLI) are an excellent scheme to boost manufacturing. We can expect more incentives to boost manufacturing, exports and FDI, as also tailored PLI schemes in new sectors like laptops, desktops, IoT devices, and white goods like LED products and ACs.

Any further cuts in income tax rates or corporate tax rates are unlikely but a major disinvestment drive in FY22 is expected.

Steps like a stimulus for high employment-generating sectors like auto, textiles, and real estate, 1 per cent GST cap for under‐construction projects, additional deductions for home buyers etc. will send positive vibes in the markets.

LTCG tax exemption and reduction in Securities Transaction Tax (STT) and Commodity Transaction Tax (CTT) is on the top of Capital market’s wishlist. Markets fear the enhance of LTCG and introduction of wealth tax in some form.

The government’s top priority for 2021 should be on pulling the nation through the final phase of the pandemic and enable quicker economic recovery to pre-COVID-19 levels of growth.

The budget must prioritise growth-oriented measures over fiscal considerations. It must focus on employment generation and on putting more money in the hands of consumers that will boost demand and drive growth.

Improving the ease of doing business, including ease of administration of the tax regime, are key asks of the industry to promote India as a global manufacturing hub. The budget proposals will not only impact the near future but could also potentially shape India’s long-term growth trajectory.

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