Budget 2020 PREVIEW: What to expect from Finance Minister Nirmala Sitharaman

Budget 2020 preview: Whether it is financial experts or the common people on the streets, everyone has big hopes from Finance Minister Nirmala Sitharaman and expect some really exciting news. As she prepares to present her second Union Budget (#BudgetOnZee) in Parliament on Saturday, FM Sitharaman knows that she has a big task ahead of her as the announcements made in the Union Budget will decide the future path of the Indian economy, revive consumer sentiment and hopefully, fix the financial sector's woes. The Economic Survey 2019-20 has projected 6-6.5 per cent GDP growth in FY21. It suggested to relax fiscal deficit target to boost growth. The Survey noted that the year 2019 was a difficult year for the global economy with world output growth estimated to grow at its slowest pace of 2.9 per cent since the global financial crisis of 2009.

The biggest announcement in the budget can come in the form of changes in the personal tax structure. Demands have been made to give more exemption to taxpayers to increase their spending power. Experts have also asked for more benefits under Section 80C of the income tax, apart from the changes in the slabs.

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A pre-budget survey has also shown that most people feel they should be having a tax fee-earning of 4.3 lakhs per year to manage an average quality of life for their family. At present, annual income upto Rs 2.5 lakh is exempt from income tax. The IANS-CVOTER survey said that while people are feeling happy with Rs 20,000 income a month, they want more exemption.

In December 2019, an RBI survey had also shown that consumers sentiment was low and they cut down on their non-essential expenditure such as going on vacations, eating out and buying cars.

You could also expect some measures to enable ease of doing business. "The Budget is expected to focus on measures to spur demand and lift economic growth. We hope that the tax proposals in the Budget enable ease of doing business, simplify tax issues, promote investment flows and tax certainty," Gokul Chaudhri, Partner, Deloitte India said.

"To provide impetus on ease of doing business in India, the Government may rationalise the taxation of start-ups by aligning the existing provisions with the recent notification issued by the Department for Promotion of Industry and Internal Trade (DPIIT). It may provide measures to improve the existing dispute-resolution process or mechanisms to reduce backlog of tax cases," he added. 

The industry remains hopeful about measures for the two-wheeler sales.

"Two-wheeler is a basic need when it comes to commute, especially in rural areas. With the upcoming BS VI transition and Government policies making insurance mandatory, on-road prices for vehicles will increase. This will drive more people to avail financing options for new purchases," said Madhu Alexiouse, Chief Operating Officer, Muthoot Capital Services Ltd.

Neelesh Talathi, CFO, Pepperfry believes that this year's budget is a great chance for the Modi government to bring ‘Sabka Vikas’ at the core of its agenda. He said that helping MSMEs scale up should be one of government's agendas.

"MSME are the original start-ups and embody the spirit of entrepreneurship. Our furniture manufacturers are artisans providing design quality that have no parallel across the world. A study commissioned by IFC estimates credit gap to our MSMEs at INR 16.7 Lakh Crores with over 80% of them not having access to the formal credit system. This needs to be addressed soon. Some of the key measures would be addressing the stress in the NBFC sector, creating platform to facilitate bill discounting and unleashing the power of our Fintech sector etc," he said.

Finance Minister's Budget speech will start at 11 am in the Parliament. You can catch all updates on #BudgetOnZee.