 "Government will move ahead with its tightening measures: Brijesh Parnami")
In its first budget presented, the incumbent government gave some tax sops to the common man. The income tax limits under section 80C was enhanced to help improve household savings and investments on property. Further overall exemption limit also was revised. So, firstly, we need not expect any more tax sops to come in this time. It is not going to be an easy budget for the common man.
With the rising interest burden on the government and the need to reign in and control subsidies, the government would be looking at avenues for tightening things. And it is well poised to do so now because it did a few things to appease the ‘noise-makers’, read so-called educated middle-class – in its first budget. Also, from a common man’s perspective the reduction of oil prices has led to reduction of diesel and petrol prices. The common man and particularly some businessmen who directly use transport services, who incidentally constitute a large segment of people, stand to gain. The government has not been so vociferous about taking credit for it, but it will definitely want to use the relief coming out of this price reduction on the common man to slowly slip in some tightening controls.
In addition, the recent reduction of interest rates by RBI will trigger some downward revisions in the interest rates which could benefit the loan borrowing customers again directly, and other citizens indirectly. Hence, with many of the commonly expected items taken care of, the government will move ahead with its tightening measures. This will happen more so because a huge interest burden is staring on its face. For every rupee spent by the government, one-fourth of it is only the interest. So let’s be prepared for some bitter pills.
The ‘Make in India’ campaign is another factor that could influence some of the budget decisions. For example in an recent CII meet, Commerce and Industry minister Nirmala Sitharaman has indicated some decisions for the gems and jewellery sector. This sector contributes significantly to the overall exports and has been identified as one of the 25 focus segments for ‘Make in India’ campaign.
The age old issue of Goods and Services Tax (GST) might be addressed this time. That issue has been much discussed and debated previously. The current tax structure has been very complex. GST, it is believed will enhance tax collection and also increase spending. This would make the businesses credit worthy and encourage banks and non-banking finance companies to increase their exposures to domestic businessmen.
On this subject, it is important to note that the growth story of e-commerce in retail sector in India has been remarkable and the sector has been increasingly contributing to the Indian economy. This sector will look for some indirect benefits to accrue to them. For example. under GST dynamics, there could be provisions to enable excise duty, service tax and entry tax (levy of which is likely to be subsumed into GST) not being treated as cost resulting in increased profitability.
Well, there never is a dull moment when it is budget time and it is hoped that this budget again will lead to some interesting discussions and hopefully some important conclusions.
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Brijesh Parnami is the CEO of Destimoney Advisors
With the rising interest burden on the government and the need to reign in and control subsidies, the government would be looking at avenues for tightening things. And it is well poised to do so now because it did a few things to appease the ‘noise-makers’, read so-called educated middle-class – in its first budget. Also, from a common man’s perspective the reduction of oil prices has led to reduction of diesel and petrol prices. The common man and particularly some businessmen who directly use transport services, who incidentally constitute a large segment of people, stand to gain. The government has not been so vociferous about taking credit for it, but it will definitely want to use the relief coming out of this price reduction on the common man to slowly slip in some tightening controls.
In addition, the recent reduction of interest rates by RBI will trigger some downward revisions in the interest rates which could benefit the loan borrowing customers again directly, and other citizens indirectly. Hence, with many of the commonly expected items taken care of, the government will move ahead with its tightening measures. This will happen more so because a huge interest burden is staring on its face. For every rupee spent by the government, one-fourth of it is only the interest. So let’s be prepared for some bitter pills.
The ‘Make in India’ campaign is another factor that could influence some of the budget decisions. For example in an recent CII meet, Commerce and Industry minister Nirmala Sitharaman has indicated some decisions for the gems and jewellery sector. This sector contributes significantly to the overall exports and has been identified as one of the 25 focus segments for ‘Make in India’ campaign.
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The age old issue of Goods and Services Tax (GST) might be addressed this time. That issue has been much discussed and debated previously. The current tax structure has been very complex. GST, it is believed will enhance tax collection and also increase spending. This would make the businesses credit worthy and encourage banks and non-banking finance companies to increase their exposures to domestic businessmen.
On this subject, it is important to note that the growth story of e-commerce in retail sector in India has been remarkable and the sector has been increasingly contributing to the Indian economy. This sector will look for some indirect benefits to accrue to them. For example. under GST dynamics, there could be provisions to enable excise duty, service tax and entry tax (levy of which is likely to be subsumed into GST) not being treated as cost resulting in increased profitability.
Well, there never is a dull moment when it is budget time and it is hoped that this budget again will lead to some interesting discussions and hopefully some important conclusions.
__________________________________________________________________________________________________________
Brijesh Parnami is the CEO of Destimoney Advisors