Finance Minister Arun Jaitley will present on Saturday the first full year Budget of the NDA government, hyped as a ‘make or break’ exercise, that is widely expected to unveil sops for tax payers while pushing forward the ‘Make In India’ campaign.
Coming as it does after the Delhi electoral defeat and the Assembly elections scheduled in Bihar later this year, speculation is on whether the budget will be populist.
There is expectation that the Finance Minister could raise tax slabs or hike investment limit in saving instruments.
He is also likely to pursue the path of fiscal consolidation and keep the fiscal deficit target at 3.6 per cent of GDP, down from 4.1 per cent expected this year.
Besides sops to individual tax payers, he is also expected to unveil initiatives to boost investments by corporates and promote manufacturing as part of the ‘Make In India’ campaign that aims to make the country a global manufacturing hub and create jobs.
The Economic Survey released today on the eve of the Budget said that it should aim at creating a competitive, predictable, clean and exemption-light tax policy regime that will lower the cost of capital, incentivise savings and facilitate tax payer compliance.
It has also underlined the need for ‘Big Bang’ reforms to boost growth to 8-10 per cent in the coming years. Besides , it has pitched for raising public investments to drive economic growth and improving business environment by making regulation and taxes less onerous.
Jaitley, who in his maiden Budget in July 2014 had outlined his approach to providing relief to individual tax payers, is expected to continue this in the BJP government’s first full year Budget tomorrow.
Last year, he had raised the personal income tax exemption limit by Rs 50,000 to Rs 2.50 lakh and also raised by same amount the exemption from payment of I-T on savings to Rs 1.50 lakh.
However, this time around Jaitley, according to experts, may choose only one of them as he looks at additional revenue to boost public spending and push economy to high growth path.
He may also look to raise the tax exempted investment limit in health insurance as well as exempt savings in pension schemes at all three stages—entry, accrual and withdrawal.