Expectations are high as Union Finance Minister Arun Jaitley prepares to present the annual Budget on Monday – will the Budget provide some relief to the salaried class, will it help stabilize the markets that are under a bearish grip, will it meet the fiscal targets and stimulate investments.
The wish list is long, but the challenges before Jaitley are many too.
Not the least being the fiscal burden of the OROP – the One Rank One Pension – for the armed forces and the Seventh Pay Commission for government employees. The government has to make a provision of Rs.1.10 lakh crore to meet the liabilities on account of both the schemes.
Deutsche Bank in a report earlier this month said that the government is likely to meet its fiscal deficit target for the current fiscal at 3.9 per cent and may settle it at 3.8 per cent for 2016-17, in order to meet the pressure of the Seventh Pay Commission implementation.
Also predictions of a slowing world economy, including a marked slowdown in the Chinese economy, and its impact on India&’s exports would need to be taken into account. However, the low global oil prices are a blessing.
Fillip for agricultural sector: With three successive droughts and the resultant slowing in the agriculture sector, some fillip for the farm sector is expected.
Higher I-T exemption limit: For the salaried class, the hope is that the finance minister will increase the personal income tax exemption limit and announce a higher deduction limit on home loan interest.
With the increasing cost of living, the salaried class feels that the current basic exemption limit of Rs.2.5 lakh should be raised to Rs.3 lakh.
Raise in deduction limit under Section 80C: They are also hoping the budget will announce a raise in the deduction limit under Section 80C. The limit under Section 80C of Rs.1.5 lakh has not been revised since FY 2014-15.
There is hope the government may add some more saving schemes and hike the deduction limit to Rs.2 lakh.
The salaried class is also hoping that the 80C deduction is linked to the income level – with higher income taxpayers being given higher limit for deduction.
Infrastructure bonds: Bringing back infrastructure bonds could also help in providing extra ways of deduction to the salaried class as well as help the government raise funds for infrastructure projects.
The deduction for home loan interests under Section 24B part should be raised further, feel experts.
Sops for real estate: The real estate sector which has seen a long period of slowdown is also hoping the Union Budget 2016 will announce measures to boost growth.
Sops for industry: The industry is also hoping for a pro-growth budget that will see the Indian economy move towards a higher growth trajectory. The Industrial Manufacturing Sector is hoping the government will announce policies and actions to revive the manufacturing sector which has been faring poorly.
GST rollout: The Indian industry is also hopeful of the stalled Goods and Services Tax bill becoming a reality soon.