Will ‘Acchey Din’ (Good Days) as promised by
Narendra Modi’s government, come with the Union Budget 2014-15?
That’s a million dollar question. Whether one is a salaried
worker, farmer, student, senior citizen, corporate leader, entrepreneur,
investor, or a home maker, expectations from the new government are running
very high.
What’s in store for the common man will be answered
by the new Finance Minister Arun Jaitley on July 10, 2014. However, there are
lots of expectations from the new government, from every sector.
WHAT IS A BUDGET?
The Budget is the most extensive account of the Government`s finances, in which revenues from all sources and expenses of all activities undertaken are aggregated.
It comprises the revenue budget and the capital budget. It also contains estimates for the next fiscal year called budgeted estimates.
EXPECTATIONS OF A COMMON MAN :
INFLATION:
One of the major issues raised by BJP during campaign was ever increasing
inflation. Narendra
Modi promised to contain inflation on becoming the prime minister.
“Bohot
hui mehngayi ki maar, abki baar modi sarkar” was one of the popular slogans
used during the BJP campaign.
Now,
it’s time for him to keep his words.
The government must work in tandem with the RBI,
and use both the fiscal and the monetary policies judiciously to contain
inflation, which is eating into the purchasing power of the common man.
But, as of now, there’s a
conflict of interest between RBI and the government. While RBI has zeroed in on
curtailing inflation by keeping interest rates high, the latter is more focused
on pushing growth agenda. For this to happen, the interest rates must fall,
which is again out of scope, according to RBI.
It
will be quite interesting to see how the new government tackles this situation.
INCOME
TAX EXEMPTION LIMIT: It seems Finance minister, Arun jaitely has already
made up his mind to raise Income Tax Exemption limits which is currently Rs. 2 lakh
per annum. It will surely help the middle class to make the both ends meet, especially because of the soaring prices of
essential commodities. Hence, there is an urgent need to raise tax limits to at
least Rs 3 lakh per annum and if possible to Rs 4 lakh.
Also,
this will encourage people to spend more, which will naturally boost the
economic growth.
HOUSING:
The Government can help the
people by raising tax exemption limit on payment of interest per annum on
housing loans from Rs 1.5 lakh to at least Rs 3 lakh
INDUSTRY EXPECTATIONS :
EXCISE RELIEF can play a major role for BJP to win the confidence of the business fraternity. The small scale industries had called for raising the excise exemption limit (present limit is Rs 1.5 crore).
The escalating costs of raw material and high interest rates are making small-scale businesses struggle to sustain. Their profit margins are severely hit and they need some form of support from the government to revive.
Even FM had admitted the fact that there’s a need to boost the growth of indigenous industry so that they can be at least at par with their counterparts in China and Bangladesh.
INVESTOR’S EXPECTATIONS:
REFORM TAXES: A series of high-profile disputes
between tax authorities and foreign companies
has made local and international
firms reluctant to expand in India.
Investors want India to stop trying to apply
tax laws retroactively. “Ensuring legal certainty and streamlining tax laws will play an important role in giving the corporate sector incentives to invest,” Morgan Stanley said in a recent research note.
Investors also want the government to announce a roadmap for implementing the goods and services tax to make tax collection more efficient.
CREATE JOBS: The finance minister should use the budget to lay out a plan “which pushes jobs, pushes exports, pushes manufacturing,” said Chandresh Nigam, managing director of Axis Mutual Fund in Mumbai.
Mr. Nigam said that the government could announce plans to set up training centers to create more skilled labourers or unveil tax breaks for building factories.
SPEND SMARTLY: Investors want to see the new government announce plans to cut back on non-productive expenses such as subsidies (especially the ones not actually yielding out any benefit).
Mr. Dayal of Baring said he expects the government to focus its spending on building infrastructure, education and healthcare, rather than using limited funds to subsidize food and fuel.
BUILD INFRASTRUCTURE: India needs to revive plans to build power plants, roads and other large projects that have been stalled in recent years and modernize its railways and cities.
SUMMARY:
On the whole expectations from this year’s budget are quite high. Everyone is hoping for the “ACHHEY DIN “to come as soon as possible.
On 10th of July,2014, we will definitely get a rough estimate of how the things will pan out in the next 5 years.
REFERENCES:
http://blogs.wsj.com/indiarealtime/2014/06/30/what-investors-want-from-modis-first-budget
http://www.mapsofindia.com/my-india/politics/union-budget-2014-15-expectations-that-bjp-government-has-to-meet
http://www.elections.in/blog/common-mans-expectations-from-budget-2014-15/
https://www.google.co.in
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