Budget analysis: An attempt to stabilize, boost economy

The budget 2019-2020 is an attempt to augment revenue, encourage productive sectors of economy and widen the social safety nets.

Though there are a number of concessions and reliefs in the budget, it also seems to lean heavily on revenue yielding taxations measures. As the budget has been built on this year’s economic performance which was described as dismal, the targets set by the government would be quiet challenging.

The most pronounced effort is to increase revenue in order to bring down the budget deficit. At the same time, it also carries austerity measures, which should also help in this regard. Some of noticeable reliefs are increase in pay and pensions of government employees as well as enhancement in the minimum wage.

As inflation during the current financial year has been high, these measures were overdue. Similarly, in a society where the number of underprivileged sections is quite high, larger allocations for social sector were also needed.

The concessions and reliefs to investors and business community are well-pronounced. The production of industrial and agriculture is not only to be brought to a higher level as it was low during this year, but it was also to be given a major boost in years ahead. In this behalf, it is also noticeable that the export sector has been encouraged in particular.

The minister informed that tax to GDP ratio was low and as such it was necessary to widen the tax net. With this in view, the income tax limit has been lowered to Rs6 lakh for salaried persons and Rs4 for non-salaried persons.

The budget also carries measures to document the undocumented economic activity. This also aims to increase the number of tax payers and revenue. There are very a large number of items on which duties and taxes have been levied or increased. Among them are items of daily use too.

It is quite obvious that the prices of all such items on which these proposals will apply could show a rising trend. However, the government will need to make some extra efforts to ensure that the intended measures bring the desired results.

The minister said the government’s effort was to stabilise economy during the next finical year and was positive that it will be able to acquire strength and resilience. People therefore expect that the benefits of this gain will trickle down to the lowest level.

The budget has also held out the assurance that price stabilisation will be one of its priorities. After the introduction of taxation measure in the budget, this will be a big challenge to face. The two big challenges of budget deficit and current account deficit are still formidable. It is therefore quite obvious that every effort should be made to bring them under control and at the earliest. Last but not the least, efforts will also be necessary to attain the targets set for the next financial year. That is the surest way to deliver what has been promised in the new budget.