Budget 2020: Pronab Sen warns against income tax cut; calls for recognising actual fiscal deficit

By: |
January 30, 2020 4:52 PM

Budget 2020 India: The noted economist and statistician opined that the current situation is proving to be a double whammy for the PSUs. He said that the central government is forcing PSUs to borrow more instead of providing their due subsidies as well asking them to buy shares of another PSU, which implies hollowing out of the asset base of the PSU system.

Budget 2020, Union Budget 2020 India, Budget 2020 India, Budget 2020-21Union Budget 2020 India: Pronab Sen has asked the government to recognise the fiscal gap which he feels is slipping out of control to almost 5 per cent.

Budget 2020-21: The head of the standing committee on economic statistics, Pronab Sen has slammed the Narendra Modi government for the recent corporate tax cuts, and has warned against further reduction in direct taxes by lowering income tax in the upcoming budget. In an interview to The Indian Express, Pronab Sen said that Finance Minister Nirmala Sitharaman’s move to relax corporate tax rates in September last year complicated the fiscal math by at least 0.3-0.5 per cent without adding any advantage to the economy.

India’s first chief statistician Pronab Sen has asked the government to recognise the fiscal gap which he feels is slipping out of control to almost 5 per cent. He further said that the government’s non-recognition of the extra 2 per cent fiscal deficit has resulted in passing off of the union government’s debt on to the balance sheets of state governments and the PSUs. He re-emphasised that the government should focus on filling the gaps on the expenditure side rather than adopting measures such as income tax cuts in the upcoming budget for the fiscal year 2020-21.

Watch Video| Budget 2020: Inadequate revenue a big challenge for government

Pronab Sen suggested that the government has stopped paying bills to the Public Sector Undertaking (PSUs) and state governments. The central government owes GST dues, payments related to Central Sponsored Schemes (CSS), NREGS payments among others to the state government. He added that the holding up of state governments’ funds are leading to a rise in the budget deficit of the states by 0.3 per cent. He said that holding up of bills used to happen earlier as well but the recent development is unique as it accounts for almost 2 per cent of the current annual GDP and the time period is much longer than earlier when it used to take place for a couple of months.

The noted economist and statistician opined that the current situation is proving to be a double whammy for the PSUs. He said that the central government is forcing PSUs to borrow more instead of providing their due subsidies as well asking them to buy shares of another PSU, which implies hollowing out of the asset base of the PSU system.

Do you know What is Finance Bill, Short Term Capital Gains Tax, Fiscal Policy in India, Section 80C of Income Tax Act 1961, Expenditure Budget? FE Knowledge Desk explains each of these and more in detail at Financial Express Explained. Also get Live BSE/NSE Stock Prices, latest NAV of Mutual Funds, Best equity funds, Top Gainers, Top Losers on Financial Express. Don’t forget to try our free Income Tax Calculator tool.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.