Income tax cuts, sops for rural and agriculture sectors predicted in Union Budget 2020
New Delhi, Jan 31: A cut in personal income tax, sops for rural and agriculture sectors as well as an aggressive push on infrastructure spending are likely to be part of Finance Minister Nirmala Sitharaman's "feel-good" second Budget.
Facing the worst economic slowdown in more than a decade, Sitharaman is expected to pull out all stops to spur consumer demand and investment, government sources and economists said.
Sitharaman's second Budget, to be presented on February 1, is expected to announce measures to restore economic growth and to set out a clear road map for achieving the ambitious target of USD 5 trillion economy by 2025.
Investments have failed to pick up despite corporate tax cuts and other stimulus measures, higher FDI inflows, plans to consolidate state-owned banks and monetary easing.
After corporate tax cuts in September last year, speculation is rife about possible reduction in personal income taxes. A combination of an increase in the basic exemption limit and/or the introduction of a differentiated tax rate structure for higher incomes may be on the cards.
To cushion the impact on collections, these tweaks might be accompanied by rationalisation in tax rebates.
"The government announced a slew of stimulus measures in the last four months but consumer confidence is missing. Not many are eager to take loans to buy homes or cars fearing the worst. The feel good factor in the economy is missing," a senior government source said.
"I think the Budget will be a feel-good Budget that will try to restore faith in the economy and spur spending and investments," the source said.
With disbursements under the PM-Kisan scheme to farmers being less than the budgeted amount, the Budget may also see measures to get states to onboard more eligible farmers under the scheme.
Also, there would be announcements for sectors such as renewable energy, e-vehicle, power, affordable housing, real estate, and exports, they said.
Financial markets are expecting relief on Securities Transaction Tax (STT), Long Term Capital Gains Tax (LTCG) and removal of dividend tax.
Capital infusion in public sector banks and liquidity measures for Non-Banking Finance Companies (NBFC) may also be on the horizon.
Both the government sources and the economists felt the Budget would reaffirm the focus on infrastructure spending after the rollout of an ambitious National Infra Pipeline (NIP) in December.
Social sector schemes such as rural electrification, MGNREGA, healthcare, education and skill training may also find mention in the Budget.
However, all such measures would come at the cost of fiscal slippage.
The Economic Survey for 2019-20, released on Friday, has already laid the ground by suggesting to the government to keep the focus on reviving growth and letting go of fiscal discipline a bit.
The RBI, armed with a favourable inflation backdrop, defended slowdown risks last year with 110 basis points cut in interest rates. As it puts a brake on the easing cycle, due to an unseasonal spurt in food prices leading to above-target inflation, the ball is in the government's court to revive growth.
Sitharaman would have to do a balancing between efforts to boost growth and the need for fiscal restraint. Economists expect a slight policy tilt towards prioritising growth.
Real GDP growth is estimated to fall to an 11-year low of 5 per cent in FY20 from 6.1 per cent in FY19. Estimated nominal growth at 7.5 per cent in FY20 is the lowest since 1975-76 (FY76) as per the FY12-based GDP series.
IIP growth turned positive but remained low at 1.8 per cent in November 2019 after contracting by (-) 4 per cent in October 2019.
CPI inflation increased to a 65-month high of 7.4 per cent in December 2019, its fifth sequential rise, mainly due to persistently rising vegetable prices.
Also, growth in bank credit fell to a 25-month low of 8 per cent in November 2019.
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Road crash in UP leaves 10 dead
Lakhimpur Kheri (UP) (PTI): Ten people were killed when a van collided head-on with a truck on the Sisaiya-Lakhimpur national highway on Monday, police said.
The van was going to Sisaiya from Lakhimpur when the accident took place between Unchgaon and Bharehta villages.
Circle Officer of Dhaurahra, Shamsher Bahadur Singh, said all nine passengers travelling in the van and the driver were killed.
District Magistrate of Lakhimpur Kheri Anjani Kumar Singh told reporters that the van collided with a truck coming from the opposite direction, leading to nine casualties on the spot, while one succumbed to injuries at the district hospital.
Circle Officer, Dhaurahra, Shamsher Bahadur Singh told PTI, "Efforts are on to establish the identity of other deceased persons."
The seven of the deceased have been identified as Jaideep Singh (25), Pawan (23), Sohan (21), Ram Goyal (42), Sahajram (35), Pappu (18), all residents of Bahraich district and Adnan Khan (15), a resident of Lakhimpur Kheri district, police said.
Condoling the loss of lives in the accident, Uttar Pradesh Chief Minister Yogi Adityanath in a post on X, said, "The loss of life in the unfortunate road accident in Lakhimpur Kheri district is deeply distressing and heart-wrenching. My condolences are with the bereaved families."
"I have directed the local administration to provide prompt and adequate assistance to the injured and the victims. I pray to Lord Shri Ram to grant the departed souls a place at His divine feet and to bestow a speedy recovery upon the injured," Adityanath said on X.
Deputy Chief Minister Keshav Prasad Maurya and Brajesh Pathak too condoled the loss of lives in the accident.
"The loss of lives resulting from the road accident in Lakhimpur Kheri district is deeply tragic and heart-wrenching. My deepest condolences go out to the bereaved families," Maurya said.
