Budget 2015-16: Impact on Several Aspects- 3

Budget 2015-16: Impact on Several Aspects- 3

A lot is expected from Finance Minister Arun Jaitley as he is going to present his first full year Budget. The country requires a larger opening out in more sectors; it needs stability of policy and tax regime besides a reasonable cost of capital, Mr. Jaitley said.

Indian strategist at Morgan Stanley, Ridham Desai said,” The upcoming Budget could be the most important one for the stock market after the early 1990s, when India launched economic liberalization”.

The key elements that analysts and economist are searching are the path taken by the government manages to boost capital expenditure given the low tax resilience.

Raising tax exemption limits leaves more money in the hands of the people, especially the middle class people. This in turn either increases saving or increases consumption and demand growth, both of which are beneficial for the economy. Mr. Jaitley might manage to meet the fiscal deficit target of 4.1% that he had set upon him, especially on the expected fund raising from PSU share disinvestment and spectrum sales. The market would be intensely listening to the next target he sets. Morgan Stanley has written in its pre-Budget report that the government will maintain the fiscal deficit reduction roadmap as per the medium term fiscal policy and target to reduce the fiscal deficit to 3.6% of GDP in FY 16 from an expected 4.1 % of GDP in FY 15.

Corporate tax rate at 30% have remained unchanged for the last seven years. In actual fact, surcharge has been mounted on this basic tax. So as to promote Make-In-India plan and put off the migration of manufacturing units from India, long-term simple tax structure is the requirement of the hour. Major announcements in tax reforms are expected from the Finance Minister in this Budget.