Union Budget 2021: Scope for tax concession very restricted, Centre may inject stimulus through capex, says expert – Business News , Firstpost

The expert stated the fiscal deficit within the present fiscal is prone to be between 6.5-7 p.c, including that the federal government may loosen up the goal however ought to hold a detailed eye on debt-GDP ratio projection

New Delhi: The scope for tax concessions within the upcoming Budget subsequent week is very restricted, and the finance minister may favor to inject stimulus into the economic system through elevated expenditure, primarily in infrastructure, EY India Economist DK Srivastava stated on Wednesday.

In the pre-finances session on 2021-22 Budget, EY India Chief Policy Advisor Srivastava stated the fiscal area obtainable to the finance minister is extraordinarily restricted and subsequently if she has to decide on essentially the most optimum path to help progress and any potential concessions on the tax aspect, that may be fairly restricted.

“If that (tax concession) happens possibly some of the sectors can be related to, could be the real estate sector and construction sector broadly where some of the incentive measures could yield positive benefits. But I feel the scope is very limited. On the other hand, the preferred stimulus injection may be through the expenditure route,” he stated.

Srivastava stated the fiscal deficit within the present fiscal is prone to be between 6.5-7 p.c.

He stated in disaster years the Government may loosen up the fiscal deficit goal, however hold a detailed eye on the projection of debt-GDP ratio.

The authorities has to lift spending, particularly capital expenditure, to an “unprecedented” degree, he famous. “Therefore, in our projection, we have now stated that capital expenditure should develop at charges not beneath 20 p.c for present and subsequent yr so as to come again to the plan of National Infrastructure Pipeline.

“Unless we really expand our infrastructure, the growth story would not be sustained. Therefore, the appropriate use of scarce fiscal resources should be to get maximum multipliers. Any stimulus on the taxation side should be very limited,” he added.

The authorities’s fiscal deficit soared to Rs 10.75 lakh crore, or 135.1 p.c of the 2020-21 Budget Estimates (BE), on the finish of November 2020, primarily on account of low income mop up.

The 2020-21 Budget had pegged the fiscal deficit for the present monetary yr at Rs 7.96 lakh crore or 3.5 p.c of the GDP. These figures, nonetheless, may need to be revised considerably in view of the financial disruptions created by the coronavirus pandemic.

Fiscal deficit had soared to a seven-yr excessive of 4.6 p.c of the GDP in 2019-20.

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