Beware the many slips between cup and lip
What all can come in the way of Budget 2021-22 accelerating India’s economic growth
Every Budget has a vision. Finance Minister Nirmala Sitharaman was clear on what she wanted to achieve as she presented her third Budget on February 1 create the conditions and impart the necessary impetus for the economy to shrug-off the pandemic and accelerate its growth. She did this by presenting a Budget with a clear direction, high on transparency and conservative in assumptions.
In line with the economic ideology a right-of-centre party would typically adopt, she eschewed hand-outs and opted to revive growth by increasing capital spending and giving a massive push to infrastructure development. Reforms were taken forward. A conscious decision was taken to go slow on fiscal consolidation with the priority being economic growth. This helped her avoid levies that could have otherwise vitiated the investment climate that the Budget sought to create.
Over 50 stocks, excluding PSU banks, can benefit from the Budget announcements
Healthcare, insurance, banking & financials, textile, auto, oil & gas and agriculture among other sectors also seen included in the growth-oriented budget. Sunil Shankar Matkar
Representative image (PC- MoneyControl.Com)
The Union Budget 2021 presented by the Finance Minister Nirmala Sitharaman is really a big game changer in terms of economic revival in India, especially post the COVID-19 damage, experts feel.
The government has estimated fiscal deficit at 6.8 percent of GDP in FY22 and 9.5 percent in FY21. The Budget increased the capital expenditure by 35 percent for FY22 over FY21 to revive the economy, and largely focussed on infrastructure (including roads, railways, National Infrastructure Pipeline, ports, power etc).
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Market Watch (ETMarkets.com)
09:25 Min | February 01, 2021, 8:59 PM IST
Tune in as we analyse three biggest themes emerging post Budget announcements, market valuations and much more!
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Transcript
Welcome to ETMarkets Watch, the show about stocks, market trends and money-making ideas. I am Nikhil Agarwal and here are the top headlines at this hour.
Sensex posts biggest Budget Day gain
Govt pegs FY21 fiscal deficit at 9.5% of GDP
LIC IPO slated for FY22
Govt to privatise two PSBs and insurance firms
Direct taxes left unchanged in Budget
Let us take a quick glance at what happened on the Dalal Street today.
Any additional burden on existing taxpayers or any new taxes like wealth tax/estate duty, which were discontinued earlier for reasons of high administrative costs and low revenue yield, may not be in sync. The mantra for the FM in Budget 2021 should be ‘No New Tax.
Finance minister Nirmala Sitharaman (File photo)
NEW DELHI: Finance minister Nirmala Sitharaman faces a huge challenge this year. The Covid pandemic raged through 2020, roiling economies and ruining many lives. The government’s revenues are down but expenditure commitments are up (think of the free vaccines promised). What path should the finance minister now take? Should she try and balance the books by levying additional taxes?
Say, introduce a temporary Covid-19 cess at the highest income-tax slab, or maybe reintroduce the wealth tax? Or, should she focus on maintaining tax stability while stepping up expenditure for economic revival?
To understand how both scenarios could play out, let’s first look at what impact moderate tax rates have on the tax-GDP ratio and how this compares with a high-tax regime.