Strong signals: 3G auction at a big premium to help narrow down fiscal deficit (even though one time revenue). Revenue collections from direct and indirect taxes from 2010-11 so far are buoyant and exceeding expectations. Economic growth vibrant with revised GDP growth at 8%. Domestic demand robust partially insulating us from the global anxieties on various fronts.
Expectations:
Direct taxes:
a) Personal income tax-No new relief/raising of exemption limit expected. This will be done with more changes in next year along with implementation of Direct tax code. Salaried employees may be exempted from filing IT returns.
b) Relief scheme for individuals to promote savings & investment particularly related to Real estate/Infrastructure.
c) Expectation on corporate taxation to be reduced by 5%-(may not materialize) along with removal of surcharge and cess.
d) Amnesty scheme to unearth black money and bring them back to IT net very much likely.
Indirect taxes:
a) Service tax may be amplified to cover new areas.
b) Excise duty net may be widened to cover SME”s who are exempt now. This may have some price impact in daily items used by common man.
c) Review of excise duty or petroleum/petroleum products due to rising crude prices.
Sectoral view:
Public – Private partnership to be encouraged to make the sector more vibrant and to complete the infra projects on time.
Reforms :
a) Increasing the FDI limit to 49% in Insurance sector from the current level could be brought about in this budget.
b) Highlights on the implementation of the GST (Goods and Service Tax) and DTC (Direct Tax Code) will be discussed in this budget.
c) New reforms on Public Distribution system may be announced.
Areas of Concern:
Continuous Uproar on 2G Auction and non functioning of Parliament during the entire winter session. This could blurt the importance on Budget presentation this year.
Crude Oil prices again reaching 100 USD per barrel could put the Government on Severe strain on Subsidies not provided for to that extent.
Higher inflation causing a great concern and regulatory measures of RBI could stagnate Growth.
Rising food and fuel prices are affecting the common man to a great extent and is a big drain on their savings.
Government will be forced to increase expenditure in Education, Healthcare, Food, Infrastructure , etc. There will be other social welfare schemes as well which will increase Government expenditure substantially.
Direct taxes:
a) Personal income tax-No new relief/raising of exemption limit expected. This will be done with more changes in next year along with implementation of Direct tax code. Salaried employees may be exempted from filing IT returns.
b) Relief scheme for individuals to promote savings & investment particularly related to Real estate/Infrastructure.
c) Expectation on corporate taxation to be reduced by 5%-(may not materialize) along with removal of surcharge and cess.
d) Amnesty scheme to unearth black money and bring them back to IT net very much likely.
Indirect taxes:
a) Service tax may be amplified to cover new areas.
b) Excise duty net may be widened to cover SME”s who are exempt now. This may have some price impact in daily items used by common man.
c) Review of excise duty or petroleum/petroleum products due to rising crude prices.
Sectoral view:
- Power Sector will be the priority of the government to enhance capacities. Structured reforms to be introduced to attract investments and increase productivity. Green power sector will be encouraged with subsidies to ensure viability.
- Automobile sector is already under margin pressure. The rise in interest rates on bank lending may have impact on growth negatively. Fresh levies will dampen sentiments.
- PORT Developments at various new locations will be encouraged including public private partnership to handle increased traffic of goods and materials efficiently.
- Infrastructure: Infrastructure is a capital intensive industry. Government spending and support is substantially required to improve the overall infrastructure in the country. The provisions required are to be at least doubled to cater to the development process. Expectation of NBFC and banks being allowed to raise Infrastructure bonds could help the situation.
Public – Private partnership to be encouraged to make the sector more vibrant and to complete the infra projects on time.
- Real Estate Sector – Housing may be considered on PRIORITY and for the first dwelling unit the Government can give relief in Interest rates through Banks (a small percentage) to continue the growth in this sector. More reforms to regulate the real estate sector are also expected.
- Telecom Sector – This sector has already shown phenomenol development in revenue contribution as also technology development. This is likely to continuefor the next few years.
- Agriculture – Could be one of the top priorities of the budget. Supports for various agricultural products and their effective public distribution system are likely to be announced in the budget. This is very critical to contain price of the various food Items and making them available at reasonable prices.
Reforms :
a) Increasing the FDI limit to 49% in Insurance sector from the current level could be brought about in this budget.
b) Highlights on the implementation of the GST (Goods and Service Tax) and DTC (Direct Tax Code) will be discussed in this budget.
c) New reforms on Public Distribution system may be announced.
Areas of Concern:
Continuous Uproar on 2G Auction and non functioning of Parliament during the entire winter session. This could blurt the importance on Budget presentation this year.
Crude Oil prices again reaching 100 USD per barrel could put the Government on Severe strain on Subsidies not provided for to that extent.
Higher inflation causing a great concern and regulatory measures of RBI could stagnate Growth.
Rising food and fuel prices are affecting the common man to a great extent and is a big drain on their savings.
Government will be forced to increase expenditure in Education, Healthcare, Food, Infrastructure , etc. There will be other social welfare schemes as well which will increase Government expenditure substantially.
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