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What Could Boost Demand In Budget 2020 – Free PDF Download

 

INTRODUCTION

  • India is going through no ordinary economic  turbulence.
  • As Finance Minister Nirmala Sitharaman rises to  present the Union budget on February 1,
  • There is little elbow room, fiscally, for any  audacious act.

3 MOST IMPORTANT PROBLEM IN ECONOMY

  1. Consumer demand is lackluster.
  2. Tax collection is modest.
  3. Estimated GDP growth for 2019-20 is 5%, an 11-year low.

FISCAL DEFICIT

  • FM can loosen the purse strings by relaxing the fiscal  deficit target by half a percentage point.
  • Most economists seem to be okay with it  If newly managed resources are spent in the infrastructure sector, and more so in small-ticket rural  ventures.

TAX REFORMS

  • Introduction of long-pending reforms on the  direct tax code.
  • The simplification of the goods and services  tax (GST).

MORE LIQUIDITY

  • The government must focus on putting money in  the hands of the masses.
  • PM-KISAN, for example, is yet to be  implemented in full.

PUSH FOR LABOUR-INTENSIVE

  • There should be a push for labour-intensive industries  such as- construction, housing, road-building and irrigation.
  • These will trigger immediate consumption.

CREDIT ROLLOVER

  • One-time rollover of bank credit, to ease the  liquidity pressure on India Inc.
  • Like the one the central bank allowed in 2008.
  • Otherwise, a lot of companies will enter crisis mode.

DISINVESTMENT TARGET

  • Government should ensure that most of the  ongoing strategic sale of public sector enterprises  is completed by March 31, 2020.
  • Zero sale in 2019-20 will again dent the  credibility of the government, whatever be the  reason given to justify the delay.

STRUCTURAL REFORMS

  • Undertaking difficult and bolder reforms of land,  labour, regulations, governance and the public sector.
  • This will not only help in reducing the cost and  improving the ease of doing business in India
  • But also unleash India’s economic potential in future.

 

 

 

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