Budget Is Expected To Be Wrapped With Sops & Promises For Urban To Low

Expectations are rising towards a bit populist sops arising out of recent demonetization and going towards upcoming #AssemblyPolls from Budget 2017. While a little adjustments or modifications in ongoing policy framework can also be awaited in view of proposed GST rollout targeted on next 01/06/2017 along with impending guidelines towards a further cashless or digital economy. Further expansions of social security, agriculture reforms may also be highlighted through. Incentives may be given towards start-ups, contract farmers or even exporters through different channels from interest rate subventions or tax holiday by the exchequer. Salaried classes may be incentivised to promote consumer spending while corporate sector capex may attract a bit exemptions for the same purpose. Minor rejig in tax slabs or hike in exemption limits in combination with the withdrawal of service tax on specific cases may add the flavor, while an impending increase in ongoing service tax rate up to the tune of 18% from a current slab of 15% is quite evitable.

But, one needs to look for the internals as well including but not limited to fiscal consolidation and future roadmap, CapEx plan for the coming fiscal along with disinvestment target if provided. Expecting a better tax to GDP ratio this time arising out of recent income declaration schemes but will keep a check on projected revenue target and plans to increase the tax base. Figures related towards provisioning of recapitalisation for public sector banks under BASEL III guidelines and compensating states post-GST rollout will fetch attentions from economic lobby along with disinvestment target if highlighted or disclosed. Scopes are higher this time for a higher CapEx by the government towards infrastructural reforms taking the advantages of falling inflation targeting employment generation and a pick-up in domestic demands.

Thus, Budget2017 is expected to be wrapped with sops and promises for the urban middle class to the low-income segment in rural India including labor, farmer, start-ups or even salaried classes. It may also attract long-term investments especially into infrastructure, real estate or NBFCs but will not certainly unfold any big surprises on either dimension for the time being.