A report from rating agency India Ratings said the forthcoming budget should provide lucrative income tax offers and cut fuel taxes to support the economy hit by the pandemic and boost consumer demand.
India Ratings expressed hope in its pre-Budget report that the new budget would incorporate and strengthen the fiscal plan outlined in the previous budget. Instead of adopting new things, the revenue and investment modalities of the current financial year are taken over, so that existing efforts can be strengthened. In this report, the budget is expected to focus on increasing demand by creating employment opportunities in the areas most affected by the global Covid pandemic.
According to the report, Finance Minister Nirmala Sitharaman is expected to delay budget inclusion, make it a gradual and phased process and ensure the economy gets the necessary financial support until the upturn kicks in. Referring to the negative impact on the purchasing power of the common people as a result of the pandemic, the report called for tax relief from them and said this could be done through a cut in income tax and a cut in the tax on oil products.
In the current fiscal year, after two additional applications for grants, the revenue expenditure is estimated to be Rs 3 lakh crore more than the budgeted amount, but the non-interest and non-subsidy components of revenue expenditure, which affect direct demand in the economy, have been reduced to Rs 13,100 crore is unlikely to stay within budget. According to the rating agency, revenue expenditure in the coming financial year will be higher than the revised estimate for the current financial year. Government capital expenditure in the current fiscal year was 2.5 percent of GDP, from 2.2 percent in the previous budget and 1.6 percent in 2019-2020.