With the Supreme Court’s nod to Union Budget 2017 ahead of the State elections, the foremost poser is: How would the Centre address issues that have cropped up after demonetisation? The government can no longer continue to downplay the impact of demonetisation and the ongoing efforts at remonetisation. Reason: The IMF has cut India’s growth rate for the current fiscal year to 6.6 per cent from 7.6 per cent. And the World Bank has reduced its forecast for the Indian economy to 7 per cent from 7.6 per cent. Therefore, under scrutiny would be the budget estimate of growth in 2017-18.
One can no longer wish away the reality. India’s automobile sales plunged to their lowest in 16 years in December after the clampdown on cash prompted consumers to delay purchases of cars, motorcycles and trucks. Similarly, real estate sector sales plunged 44 per cent compared to the year-ago period, according to property consultants Knight Frank. Surely, there ought to be some steps to revive the key sectors of the economy in the budget.
And the people would be expecting follow-up measures on flushing out black money. This may include clampdown on benami property and runaway gold holdings. Yet, the most eagerly anticipated step from the finance minister would be a bold restructuring of income tax slabs. There is pressure on the government to loosen the 30 per cent tax rate, from the present `10 lakh income to Rs 20 lakh, a demand that gains credence as the government’s move to promote digital transactions is expected to bring a large number of people under the tax radar.
Recently released data for assessment year 2012-13 showed taxpayers account for just about one per cent of India’s population; only 5,430 individuals pay tax of over Rs 1 crore. Evidently, the stress would be on widening the tax net. And what better way than offering the carrot of lower rates to honest taxpayers. At least, that’s the expectation. February 1 holds the answers