The budget exercise for 2019-20 has achieved completion with FM Nirmala Sitharaman laying out proposals echoing PM Modi’s vision of ‘Minimum Government, Maximum Governance’. It builds an ambition following a definite mandate by citizens endorsing faith in Modi 2.0. Emphasizing infrastructure and rural development, the proposals painting a USD 5 trillion economy path have come at a critical point where the economy needed a transformation by providing stimulus to several sectors, particularly agriculture, rural infrastructure, start-ups, MSMEs, employment etc. Equally crucial was the need to grow foreign investment, identify alternatives to tap capital and manage current account deficit by raising exports.
Prevailing Pain Points
Dipping tax collection, soft-turned manufacturing & slow core-sector growth has continued to be a challenge at least for the past three quarters. Macroeconomic challenges include the sharp cyclical slowdown bringing economic growth to its lowest level in five years and the need to rebalance the Indian economy by spurring investment. Back in 2014, the Indian economy was a shade lower than USD 2 trillion. Indian GDP has increased by 50 per cent and is poised to cross USD 3 trillion by this fiscal yearend, a total net increase of USD 1 trillion in GDP in just five years. The FM has made an arduous attempt to balance allocations across development, fiscal prudence and socioeconomic priorities considering that past several quarters were unsuccessful in igniting the growth engines. India’s economic growth fell to a five-year low in 2018-19 at 6.8 per cent, much below the government’s projections of 7.2 per cent. Growth in the fourth quarter decelerated to the lowest in 20 quarters at 5.8 per cent, owing to a decline in investment activity.
Tax Collection Trends
This story is from the August 2019 edition of Legal Era.
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