As the Parliament Session 2018 begun followed by the Economic Survey that was tabled by the Finance Minister, the countdown for the Union Budget 2018 has also started. While the last year’s budget mainly focused on consolidating the economic gains and pushing the reform agendas, this year’s budget is going to be different.
Since this is going to be the last annual budget from PM Modi’s government before the 2019 elections, hopes are high and anticipations are quite aspiring this time. Many are speculating that the upcoming budget will focus on the middle class common man while others are guessing it’s going to focus more on agriculture and job creations.
As the public eagerly awaits the Union Budget 2018, here are 5 things that could make this year’s budget quite different from the previous ones.
- The government has been cautious of exceeding the fiscal deficit targets considering the past few years. In 2016, it stuck to the fiscal deficit target while in 2017 it converted the target to range. Currently the fiscal deficit target is 3% but for the upcoming budget, the government may raise the base range while keeping the 50 bps leeway range intact.
- The budget consists of two parts- one about the projects and allocations while the second is about direct and indirect taxes. As per the reports, the second one is going to be redundant this year. For direct taxes, the rates may have largely stablised while for indirect taxes, the budget will have to do a little on this front as the GST council decides the rates.
- This year’s budget could focus on reducing stress of the farmers by ensuring remunerative prices for them. The areas of focus could be tax incentives for sectors like agrochemical, fertilizers, drip irrigation, etc. A big allocation could be made for cold storage, better transportation, farm to fork policy and eNAM (electronic national agricultural market).
- While many believe that owing to the general elections that are due in 2019, the government may focus on sops for the common man for appeasing the voters. However, another important observation is that the public has handled demonetization and GST quite well despite the initial conflicts and chaos. The government may opt for tougher measures in the long run rather than pleasing the people with small sops.
- With so many changes being made in the past few years like integration of railway budget into the union budget and shift in the budget announcement date from Feb 28 to Feb 1, many more changes are expected to take place. The government may simplify allocations as revenue and capital which will more clearly reflect the national accounts.
