ALSO READBudget 2018: Budgetary support for Indian Railways to be cut by 27% in FY18 Budget 2018 Could Bring a Change in Income Tax Limits Budget 2018 might have Rs 740-bn allocation towards fertiliser subsidy UKIBC expects corporate tax cut and labour reform in Union Budget 2018 Indian Budget's misplaced priorities
Budget 2018-19 is one that the markets are looking forward to eagerly – more eagerly than the past few years when the Union Budgets were referred to by many as a non-event. This is mainly because it cannot be ignored that this will be the last full Budget before the next general elections in 2019, and eight state elections are coming up in the medium term. Markets would, therefore, closely watch announcements around taxation, rural economy, social sector and infrastructure spending.
After the rollout of the goods and services tax (GST) in July last year, the possible indirect tax change in the Budget might happen in the form of customs duty tweaks, given that GST Council meetings decide on the bigger tax structure. In earlier Budgets a road map for bringing corporation tax down was hinted at. Corporate entities would be watching for some headway on this when Finance Minister Arun Jaitley presents the Union Budget 2018-19 on February 1. The world’s largest economies have taken steps toward this end. But having said that, each economy has its own unique aspects and such action could not be simply replicated. Any reduction in corporation tax, if implemented, still remains something that could have a far-reaching impact on earnings.
The stress in the small and medium enterprises (SME) and the unorganised sector has been receiving attention and some measures to revive mid- to small-sized businesses affected by disruptions could also be seen in Budget 2018. ‘Housing for all by 2022’ has been another stated policy objective and allocations to this segment are likely to continue. Much has been said about doubling farm income and reviving the rural economy. This is one area where a prudent spending balance is needed the most.
Given the consistent and constructive policy actions seen on specific problem areas and the overall economy, almost on a monthly basis in the past year, it would be natural to believe that the progress would continue.
The author is an executive director & CIO at Centrum Wealth Management