Union finances 2021: Economists name for progress, reforms within the pre-budget meet
Indian Union budget 2021-22: Saturday's economists impressed the government to continue to focus on growth, reconstruction and reform as it prepares for a budget like never before to quickly get the Covid-ravaged economy back on track.
In a pre-budget consultation meeting with Finance Minister Nirmala Sitharaman, the economists took the view that while the government does not need to be unduly concerned about the budget for FY22 and push official spending, budgetary targets, particularly revenue collection, do should be realistic taking into account the damage caused by the pandemic. Earlier in the day, Sitharaman also held a virtual meeting with trade organizations.
The government had projected a budget deficit of 3.5% for FY21, but its projections were mixed up due to the pandemic and analysts now expect it to rise to 7 to 8% of GDP this fiscal year. Similarly, government debt is expected to grow up to 90% of GDP this fiscal year.
In terms of growth, some agencies have improved their forecasts for this fiscal year thanks to the unexpectedly low decline in real GDP in the September quarter. The latest projections for India's real GDP decline for FY21 are in the 7.7-10% range, with a strong recovery (around 9-11% expansion) in the next fiscal year.
The trade organizations, for their part, sought a greater flow of cheaper credit. You want the borrowing cost to be just 2.2% above the 4% repo rate. Better coverage for exporters through the Export Credit Guarantee Corporation under the so-called Nirvik program is also the order of the day.
Sharad Kumar Saraf, Association of Indian Exporters Organizations, said: “We need to put in place a double tax deduction system for internationalizations so that exporters can deduct from their taxable income twice the qualifying cost of approved overseas activities, including market preparation, market research and market promotion and market presence. “The program has an upper limit of $ 5.00,000.
Similarly, he advocated easier and more timely GST refunds and tax deductions for production development, in sync with those for R&D. Also, the tax deduction for R&D spending, which has been reduced from 200% to 100%, could be restored said Saraf.
Economists who attended the meeting included former RBI Deputy Governor Rakesh Mohan; Executive Director for India at the IMF Surjit S Bhalla; Chief Economist at Aditya Birla Group Ajit Ranade; and Arvind Virmani, former economic advisor.
The PHDCCI Chamber of Industry also proposed a ten-step strategy in pre-budget consultations with the FM on Saturday, focusing on fueling consumption and demand and encouraging private investment to achieve higher economic growth.