'Budget should squarely focus on reducing the fiscal deficit'
and a serious attempt is expected in the Budget to contain the fiscal deficit.
Cutting back oil and other subsidies will help lift investor sentiment further.
Should the government focus on giving clarity in the Budget or consider levying new taxes?
The Budget should squarely focus on reducing the fiscal deficit and the logic for a new tax, if any, should come from that, rather than as an ad hoc measure. If the fiscal deficit is contained, investor sentiment improves and growth revives, tax collections will automatically improve even at the present rates. The other issue that needs to be looked into is infrastructure. Buoyancy in stock markets indicates renewed investor confidence.
The question is whether the positive sentiments will remain long enough till growth resumes in the productive sector. For this a lot hangs on the Budget.
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