According to the budget wishlist, see how the budget 2020 can be
The budget for the fiscal year 2020-21 is scheduled on 1 February. From fund managers to traders, everyone has some hope from this budget. Because of these expectations, let us know how the budget of this time can be, that is, what can happen in it. (Source: iFAST Financial India Research Desk)
In December 2019, the government announced infra projects worth about Rs 102 lakh crore. The roadmap is expected to be presented in the budget on how to complete this ambitious plan. Apart from this, power, railways, urban facilities, education, health, electricity in villages, affordable housing, and real estate are expected to be given a boost.
What will state banks get?
The possibility of recapitalization of PSBs is low. Yes, any announcement can be made about how the National Company Lotribunal (NCLT) can recover the arrears. Apart from this, the focus of normalizing the credit cycle and taking the benefit of cutting interest rates to the people can be seen in the budget.
The government is taking several steps to get the economy back on track. However, due to corporate tax cuts, low GST collections and relief packages to different sectors, the government is likely to incur higher losses at the fiscal level. According to estimates, the fiscal deficit could be 3.7–3.8%. The government may prefer disinvestment in government companies to increase revenue. Privatization may be an option before the government.
Emphasis on increasing rural consumption
The Indian economy is primarily agrarian. In late 2019, due to untimely rains, low cost of production, there was a negative impact on rural income. In such a situation, the government can announce minimum support price (MSP), incentives and subsidies to increase rural consumption so that the demand in the market returns. Besides, there is a possibility of a change in the income tax slab to increase expendable income.
What will the stock market get?
Several steps have already been taken to increase investment in the stock market. For example, the government recently brought Bharat Bond ETF and the proceeds from EPFO were invested in index funds. To increase the participation of investors in the market, the government can introduce many similar products. There is a possibility that the government may take some steps on the tax front to increase the FPI and make any announcement regarding share buyback.
FDI rules will be easy!
Foreign direct investment (FDI) in India has been steadily increasing in recent years and the government may take some steps to ensure ease of doing business to keep the trend going. Besides, investment in new sectors can be encouraged by making some changes to existing FDI regulations.
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