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A day ahead of the presentation of the Union Budget 2016 by Finance Minister Arun Jaitley, the topmost point in the mind of analysts and economists is fiscal balance and how the FM can boost economic growth while ensuring he does not mess up the numbers – a complicated juggling act. Economic growth is a must as it will create jobs, something that the then Bharatiya Janata Party (BJP) PM candidate before the elections Narendra Modi had promised to create. The NDA govt is yet to deliver on this promise. So, here are some points that Jaitley may well look at: (Express Photo)
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1. Union Budget 2016 should focus on reviving the dormant investment cycle and raising the revenue base as the present macroeconomic stability is primarily driven by collapse of global commodities prices led by oil, India Ratings said. "The topmost priority of the government in the forthcoming Union Budget 2016 should be to revive investment and increase the revenue base," ratings agency India Ratings said in a note. Stressing on the need to revive investment in the Union Budget 2016, the report noted that though capital expenditure increased by 25.5 per cent in FY16 over FY15, as a percentage of GDP, it is still stuck at 1.7 per cent and needs to go up to 2 per cent. (Express Photo)
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GDP grows at 7.9% in Q4, may record 8% growth this fiscal: Gaining momentum, economy grew by 7.9 per cent in March quarter to consolidate India's position as the fastest growing major economy with a five-year high growth rate of 7.6 per cent for the full fiscal on robust manufacturing growth. Enthused by the impressive numbers for 2015-16, as against 7.2 per cent in previous fiscal, the government said the growth rate can go up to 8 per cent in the current fiscal on the back of good monsoon. (Reuters)
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3. On the need to increase revenue base, the note said, "Besides enhancing tax compliance and reducing tax disputes, the best way is to implement the direct tax code (DTC) and GST at the earliest." As the fate of DTC is not known, implementing GST appears to be the only way out for accelerating tax revenue, it said. (Reuters)
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4. On taxation, the report expects government to reduce corporate tax rate by 100 bps in the Union Budget 2016 as part of its stated objective to reduce corporate tax rate to 25 per cent by FY20. (PTI)
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5. India Ratings also expects an increase in service tax rate to 16 per cent from the present 14 per cent to align it with the proposed GST rate, apart from a schedule for the removal of exemptions available to companies. (Reuters)
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