According to Kirtika Suneja and Yogima Seth Sharma, the budget should continue to focus on capital spending as an engine of growth and boost manufacturing while continuing post-pandemic fiscal consolidation.
- The budget will attempt to limit the impact on the Indian economy due to the global slowdown.
- Global slowdown weighing on exports and industry.
- Russian-Ukrainian crisis, monetary tightening, main concerns.
- Further increase capital spending from 2.9% of current GDP to almost 3.5%.
- Streamline personal income tax rates to stimulate demand.
- Reduce the maximum GST rate by 28%.
- Improve the ease of doing business.
- Urban Employment Guarantee Program.
2. Manufacturing Stimulation
- The budget should continue to focus on reviving domestic manufacturing.
- Sluggish exports are dragging down the manufacturing sector.
- Pockets of weak demand relating to rural value chains.
- LIP programs for labor intensive sectors likely in budget.
- 27 sectors in Focus Make in India 2.0.
- Extend corporate tax of 15% on new investments to all sectors.
- Increase cash lending to MSMEs without collateral.
- Amend classification standards for MSME APMs.
- Reduce taxes on electric vehicles.
- RoDTEP program for all sectors to increase exports.
3. Fiscally Responsible
- The budget should continue to focus on post-Covid fiscal consolidation
- Economists expect a fiscal gap of 5.5 to 5.8 percent of GDP for FY24.
- The food and fertilizer subsidy bill should be lower.
- High nominal growth could keep taxes strong.
- The gross tax catch-up for financial year 24 is 14 to 16% higher than that for financial year 23 BE.
- A resurgence of the pandemic is a major risk.
- Financial turbulence and a sharper-than-expected global slowdown other risks.
- Accelerate the monetization and privatization of assets.
- Try to reduce subsidies and revenue expenditures.