Budget 2022: It is unclear if Nirmala Sitharaman will tinker with income tax rates.
New Delhi:
Finance Minister Nirmala Sitharaman is likely to raise spending on infrastructure when she presents her fourth budget today, but experts say fiscal constraints leave little chance of concessions for households hurting from the pandemic.
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The budget for the financial year starting April 1 is likely to announce steps to lift growth beyond 2019 levels after recovering last year from the worst recession since independence.
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It is unclear if Ms Sitharaman will tinker with income tax rates but many will hope that the exemption limit of Rs 2.5 lakh will be raised amid rising prices of everyday items.
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A day before the budget, the government’s annual economic survey said India will lead the world in economic growth at 8-8.5 per cent and concluded that it has the headroom to do spend more.
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The budget comes days before elections in Uttar Pradesh and four other states, raising expectations of amped-up rural and agriculture spending.
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Asia’s third-largest economy is estimated to expand 9.2 per cent in the financial year that ends in March, following a contraction of 7.3 per cent in the previous one, but the recovery is now seen tapering.
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To scale up the economy to $5 trillion by 2025, Ms Sitharaman is widely expected to continue pushing for large-scale spending in hopes of accelerating investment and jobs.
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Under plans to spend more on infrastructure, experts expect to see a higher allocation for roads, railways and water.
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Ease of tax compliance, simplification and digitisation as well as ease of doing business are expected to be in focus as are measures to support small businesses.
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Healthy tax revenues and an ambitious disinvestment plan may help contain the fiscal deficit to 5 per cent next year.
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This year, the fiscal deficit is expected to be 6.3 per cent, below the projection of 6.8 per cent, on the back of buoyant tax revenues, limited spending and higher nominal GDP growth.