#Budget2014: 10 Things To Expect From Finance Minister Arun Jaitley

Hope FM Jaitley will bring laurels to the Modi government by giving an exemplary budget speech and equally spectacular budget. The Sensex will pretty much show the results soon.

Finance minister Arun Jaitley is all set to present his first budget for the Narendra Modi-led BJP government.

Today at 11 AM, he will begin his maiden speech in the Lok Sabha.

After a good rail budget, the middle class and the industry have quite a high expectation from the finance minister Jaitley. As the Economic Survey, released on the eve of union budget, has projected a higher growth at 5.4% to 5.9% in 2014-15, the winds from North Block are set for a change.

Here are 10 things we should expect from the finance minister today:

  1. Income Tax: There is a little chance that the FM will budge on the tax slabs or tinker the threshold limit, but we may expect incentives on saving which will provide relief.
  2. Domestic Investment: To boost the investments, FM may announce tax incentives for industry. The government has already extended the excise duty concessions for automobile and consumer durable sectors till December. Tax exemptions on infrastructural bonds cannot be ruled out too.
  3. Disinvestment: With a buoyant market, the FM may announce disinvestment targets for the public sector units to get more money for its own investment plans and social sector policies.
  4. Foreign Investment: In a bid to restore investor confidence, both domestic and foreign, Jaitley may announce scrapping of the provision of retrospective taxing of corporate mergers and acquisitions, a legacy of the UPA that was blamed on putting off foreign investors.
  5. Fiscal deficit: Fiscal deficit and inflation are going to be top priority for the government. Various reports say that the government is looking at a fiscal deficit of 2.5% of the GDP. A key reason for high fiscal deficits is the uncontrolled growth in non-merit subsidies – mostly in the energy sector, but also in related areas like fertiliser and food. Phasing off of subsidies on diesel and LPG in small but periodic installments should be expected.
  6. Current Account Deficit: The FM is expected to take a call on reducing duties on gold import, which were raised last year to check ballooning current account deficit.
  7. Loans and Housing: The government had already made its intention clear about education and housing. It is expected that FM will announce some relief on home and education loans. The low-income category housing is likely to get a fillip as an interest subvention scheme may be announced in the budget. This is in line with the government’s plan to create 100 new smart cities. Incentves to developers developing these cities may also be expected.
  8. Poverty: The government may do away with the UPA schemes or modify them in order to provide respite to the poor. It is expected that FM will announce tweaking of Food Security Act. Shifting to cash-based transfers based on a revamped Aadhaar scheme, where the primary purpose is identification of the really poor is also to be in the kitty. The MNREGA scheme may be tweaked too.
  9. Black Money: on the issue of black money, FM is expected to announce one time amnesty scheme where there will be identity protection for those bringing in the money. A special tax fraud centre to discourage the black money may also be announced.
  10. Agriculture: FM could provide relief to farmers to help them tide over the impact of deficient monsoon which could lead to fall in agricultural output. The government may set up a price stabilization fund, as promised in the BJP’s manifesto.

The Economic Survey has suggested a three-pronged strategy of containing inflation, pushing tax and expenditure reforms and legal and regulatory frameworks for market economy for achieving 7-8 per cent in coming years.

Hope FM Jaitley will bring laurels to the Modi government by giving an exemplary budget speech and equally spectacular budget.

The Sensex will pretty much show the results soon.

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