NEW DELHI :
The odds are both stacked against it and in favour of it. Following the tradition would make Finance Minister Piyush Goyal rise on Friday to present the 2019-20 interim budget. But this is a Narendra Modi government and an election year. So don’t be surprised if Goyal, inspired by his boss, presents to you a full-fledged budget and gives you all those tax breaks that you prayed for in the last four years.
A change in tax slabs is in the heart and on the lips of every salary earner. Even as the number of taxpayers increased by 28% to 8.27 crore in the three-year period to March 31, 2017, the middle class has not really got much from the Modi government in terms of tax relief, barring a few carrots here and there.
There are two items that are most expected, though Goyal could choose to go with only one of them. A relief package for farmers is on the cards.
The distress in the farm sector is not a point of dispute anymore. Often, a farmer goes out of the formal banking credit system once farm loans are waived. This has been the bane of all the farm loan waiver schemes announced earlier. The contours of the relief package are thus to be watched out for as the government, known for mostly sticking to its numbers, will also be fighting to keep its fiscal deficit within the targeted 3.3% of GDP.
Another announcement -- and this will be the most awaited -- could be on universal basic income or a minimum wage scheme for the poor. Congress President Rahul Gandhi has already taken the upper hand, promising UBI at a rally in Raipur. There are only a few hours to go to see if Modi will bite the bullet. How the government will bear the brunt of such a scheme and how it chooses to tackle its fiscal math will be points to be looked at.
A gradual reduction in corporate tax rate to 25% was promised by Arun Jaitley in 2015 but that hasn’t happened in letter. Jaitley’s 2018-19 Budget reduced the tax rate to 25% for companies with turnover up to ₹250 crore. According to Jaitley, this benefited the entire class of micro, small and medium enterprises, which account for almost 99% of companies filing their tax returns.
Companies beyond the ₹250-crore threshold continue to be taxed at 30%. Any relaxation in that limit is unlikely as the government tries to manage farm distress at a time when collections from the GST have remained below expectations. The government has a budgetary target of over ₹1 lakh crore monthly average GST collections but in the 10 months of the financial year so far, the target has been achieved only twice.
Bankers, advisors and public sector employees will also be waiting to hear the announcement on disinvestment. The government had set a target of ₹80,000 in proceeds from sale of its holdings in various public sector undertakings. As on January 29, the government had realised Rs. 35,532.66 crore from disinvestment.
The markets are generally sceptical of a very high disinvestment target as the government machinery is not oiled to tap the markets with full potential. Also, the bureaucracy in the Modi government has been reluctant to price the offerings of PSUs cheaply, something the market looks for earnestly. Unsurprisingly then, the government is not even half-way through its disinvestment target even after ten months of the financial year having lapsed.
Stakeholders will also be interested to know if the government plans to exit profit-making undertakings as well or if it plans to sell large loss-making enterprises -- like its earlier plan to sell Air India. Any word on selling stakes in Air India will also be lapped up.
More statements on merger of public sector banks and their recapitalization are also expected.
A big number to watch out for will be the figure against wireless or spectrum revenue. An auction of radio frequencies is expected in the next financial year. Collections from spectrum auction had benefited the government in a couple of years before 2018-19 but with no auction happening in the ongoing fiscal year, the government was strapped for cash.