EXPERT ANALYSES UNION BUDGET 2020-21: A MIXED BAG

Finance Minister Nirmala Sitharaman’s second Budget presented three themes -- aspiring India, economic development, caring society. And it seeks to cater to the demand side of the economy by trying to put more money in the hands of individuals.

SALIENT FEATURES

Nominal Growth: For 2020-21, Sitharaman has pegged the nominal GDP growth rate at 10 per cent, lower than the 12 per cent envisaged for the current fiscal.

Fiscal deficit: The Budget relaxed the target for the fiscal deficit to 3.8 per cent from 3.3 per cent.

With the fiscal deficit hitting 132 per cent of full-year target by December, this was expected. But, writes BusinessLine Research Bureau “despite the sharp slip on the fiscal deficit target, the numbers do not add up. In fact, if the still ambitious target on disinvestment, income tax collections, and spectrum are brought down to more realistic figures, then the fiscal deficit of 3.8 per cent too looks difficult to achieve, unless expenditure is cut back sharply in the fourth quarter. For now, the Centre has only lowered expenditure marginally by 3 per cent from the budgeted figure.”

Receipts and expenditures: Sitharaman said receipts for 202021 are pegged at Rs 22.46 lakh crore while expenditure at Rs 30.42 lakh crore. The revised estimated expenditure for FY20 has been pegged at Rs 26.99 lakh crore and receipts at Rs 19.32 lakh crore, she said. The net market borrowings would be at Rs 4.99 lakh crore in FY 2019-20 and are estimated at Rs 5.36 lakh crore in the next fiscal. She, however, said the government expected tax buoyancy to take time and the recent cut in corporate tax to cause loss of substantial revenue in short-run, economy to reap huge returns in due course.

Benefit for corporates: The government proposed to remove dividend distribution tax on companies, but the tax will be shifted to recipients at the applicable rate. The proposal would make India more attractive market for investment. This will cost the Government Rs 25,000 crore in revenues. The corporate sector was earlier handed out a major corporate tax rate cut in September last year.