What is the annual budget?
An annual budget is a financial document of the central government that outlines the expected income and expenses for a defined period. It can be a roadmap guiding resource allocation to achieve organisational goals and objectives efficiently. It also helps businesses and individuals make well-informed financial decisions and control their overall financial health.
What does the budget mean for a common man?
For a common man, budget means a relief for him in many ways, be it taxation, inflation, health or education or anything that makes his living easier. In the budget, the public expects tax sops from direct tax to get more money in hand from their income and spend more for consumption. From indirect tax, they too want to get food & other consumer items at cheaper prices. Besides, they want proper health & education facilities and more jobs from the government.
* Headline retail inflation rate at 5.48% for Nov 2024 — rural areas experienced 5.95%, whilst urban regions recorded 4.83%.
* As the current taxation system attracts 5% to 20% tax from annual income of Rs 3 lakh to Rs 15 lakh & higher income draws 30%, the middle class, however, wants more sops on tax in the upcoming budget.
What does the government want from the budget?
Primarily, the government wants a balanced budget, which will benefit both the public in general and will boost the economy for the country as well. It also focuses on fiscal prudence, GDP growth, issue of taxation (direct, indirect & corporate tax) for bringing more wealth into its kitty, containing inflation etc. Besides, it also emphasises on boosting exports & manufacturing to create more jobs in the country.
The government also wants traders, investors should prioritise sectors such as infrastructure, defence, railways, energy (especially renewable energy), agriculture, electric vehicles (EV), and the expansion of the MSME sector.
* India’s GDP slumped to its lowest level in 7 quarters at 5.4% in Q2FY25.
*RBI has projected a full-year GDP growth of 7.2% for FY25 & the govt says growth in the 6.5%-7% range in the same fiscal; govt expects sharp rebound in H2 of the year with real GDP rising 6% in Apr-Sep this fiscal.
* India’s Apr-Nov 2024 fiscal deficit hits 52.5% of FY25 target at Rs 8.47 lakh cr; govt hopeful to bring it down to 4.5% from 4.9% in fiscal year 2024-25 & targets it at about 4.3% in 2025-26.
What does the industry want from the budget?
Industry wants the government to lower the excise duty on fuel and reduce marginal tax rates for personal income up to Rs 20 lakh per annum to boost consumption in the forthcoming budget. It also expects additional measures from the government to boost exports and manufacturing output for ease of doing business, especially for MSMEs.
* India's manufacturing activity grew at its weakest pace for the year 2024, falling to a 12-month low in December to 56.4 from 56.5 in November.
* With muted exports, the government is hopeful to increase it significantly. As per RBI, the FDI in India reached US$1.03 trillion from April 2000 to September 2024, with over 69 percent of inflows occurring since 2014 and it was complemented by exports totalling US$778 bn.
*Corporate wants more sops in uniform tax rate in the budget 2025-26 to attract more investors in the capital market: In the last Budget for 2024-25, taxpayers were subjected to a uniform long-term capital gains tax rate of 12.5% on all financial and non-financial assets. Previously, the tax rate for such gains was 10%, while non-equity assets faced a rate of 20%.
What does the market want from the budget?
Experts want measures from the government to enhance the efficiency of capital markets and promote broader capital market inclusion.
*Incentivise long-term savings, both in debt and equity, to help boost investor participation.
* Need reforms for increasing access to capital markets for a wider population, which could foster economic growth and financial inclusion.
