Strong and resilient macroeconomy, buoyant tax revenues, budget in an election year, compulsion of energy transition, NEP 2020 and the follow up needed- here are some of the background factors that nudges Finance Minister Nirmala Sitharaman to design her sixth budget. In this context here are some budget interventions that are expected in this budget.
The budget will be designed in the context of the Vikasit Bharat 2047 theme and supporting four important groups: the Youth, Women, Farmers and the Poor.
- National Energy Transition Mission: Green Energy is going to be the theme of this budget. Europe’s CBAM, Carbon Tax, Carbon Credit, improvement in technology and cost reduction, overall climatic commitments, entry of trade barriers on emission creating industries…all these indicates that energy transition is going to be a big economic policy measure in the near future. In this context, the budget is all set to announce lot of high intensive measures. The solar roof top policy announced by the PM recently is just a beginning.
- Creation of a Fund of Fund for the promotion of Green Entrepreneurship and Green Startups.
- Social Security Scheme for Gig workers: The gig workers have grown into a formidable dynamic labour force. All of these are youngsters, and the budget may consider their vibrant work culture and hence should come out with an insurance or pension scheme.
- Enhancement of the Standard Deduction in Personal Income Tax: In an election year, a small increase in the standard deduction by nearly 20 k to 30 k may impress the tax payers.
- Withdrawal of the Dividend Distribution Tax: the Dividend Distribution Tax is some sort of a double taxation and hence it should be avoided to make the tax system fair. Its withdrawal may also pop up the stock market.
- Policy on Internationalisation of India’s Higher Education System in the context of NEP 2020: The budget may out with policy measures and supports that may facilitate internationalisation of India’s university and higher education. More support to tier 2 IITs is also can be expected.
- All India Health/Medical Service: The XV Finance Commission recommended the formation of an All India Health/Medical Service. The government is yet to make a major step in this direction and this budget may come out with some announcements.
- An All-India Agricultural Research Institute on Climate Adaptation in the name of Dr MS Swaminathan.
- A PLI like scheme for electronic component industry.
- Khanij Bidesh India Ltd: a higher fund allocation for Khanij Bidesh Limited to propel India’s Energy Transition.
- GIFT City: the GIFT city is expanding to accommodate more international services and institutions. in this context, the budget may allocate nearly Rs 3000-4500 crores for the expansion of facilities in the GIFT City.
- AI Adaptation: the budget may add supportive funds for creating AI adoption in industry, education and digital sectors. startups will be provided with capital from a common budget created fund. Besides, the GPAI initiatives will be found rapport in this budget. AI adoption may come under the PLI support.
- Import duty on EVs may be reduced but marginally to nudge Tesla, but with riders.
- Extension of the sunset period for the 15% Corporate Income Tax ( new industries) to 2025.