Our honorable finance minister Mrs. Nirmala Sitharaman addressed the nation on 1st February 2021, to notify the plan of the government for the coming financial year 2021-22. The 130 crore population has suffered a lot in covid and this has contributed in contraction of our GDP by 7.7% in FY 2020-21. Therefore, Mrs Sitharaman has promised that she will present a budget that will support the fast recovery of India’s economy. Besides her promising statement it’s very important to know what factors can affect our purchasing decision for the coming fiscal year 2021-22.
Here are several markets expectations, both positive and negative, together that will decide the financial journey of every Indian resident:
Covid Cess: Cess is an additional tax that is collected for a specific purpose, and the devastating impact of covid is still expected to continue but only on our pockets. After the introduction of “Swachh Bharat” cess it is expected that inclusion of “Covid” cess can be one a significant reform that government might focus. This inclusion of an additional cess can surely make a difference for a sizeable taxpaying population in India. (*currently Indian taxpayers contribute nearly 4% towards development of India, further divided into education, infrastructure, Krishi kaliyan, health and Swachh Bharat as cess.)
Section 80C: To promote spending government can target section 80C as bait, by increasing the limit of exemption. Such extension can actually benefit the middle-class tax payers in India to counter inflation, as present exemptions are questionable for present economic condition.
Tax relief for reimbursement: The work from home culture is the new normal and with these allowances and perks are now taxable. This budget it is expected that some sort of rebate can be offered which will promote spending.
Other than salaried tax payers, in order to increase rate of employment and control inflation government needs to focus on following sectors too.
Realty Sector: Infrastructure development is now a need more than a want whether it is health, telecom or power sector. Therefore, a relief is mandate to develop India and to bring back the motive of USD $5 trillion economy on track where infrastructure will play a vital role.
Farm Bills: It has been nearly 60 days since farmers are away from their native villages fighting against the agriculture reform laws. It will be an important aspect for the ministry to look forward towards the issue and provide a sure short solution.
Health: With India’s applauding contribution towards healthcare during covid-19 the expectations from the sector has gone to another level. Moreover, with this alarming situation of Covid-19, India needs to increase its share to promote improved health in Urban as well as rural parts of India. The budget 2021-22 is intended to increase its GDP allocation towards the health of India. This will promote India pharma-sector which has been a niche priority in India’s health infrastructure development.
Make in India: India’s agenda of becoming an atmanirbhar bharat has boosted the scalability of MSME segment. With one grid nation plan government of India has stated its efforts of managing the loss making DISCOMs. However, with the coming budget it is important to address this loss-making sector and project the roadmap for coming 3-4 years.
Startup: The number of startups in India has grown by nearly 29X since 2016 owing to a favorable market ecosystem. However, the rate of funding has been sturdy owing to global economic factors which affected investor sentiments.
Solar Industry: The major concern of the solar industry is the basic custom duty (BCD) on solar equipment. The market players of solar industry are expecting a hold on imposition of BCD as it will affect the consumer demand which has already fallen by nearly 80-81% in quarter 2 of 2020-21. Moreover, the rising prices of steel has also been a concern for the industry as global steel prices are high owing to rise in the material cost affected due to import ban.
For middle class salaried employees, a single relief or an additional burden can affect a lot as this section has suffered the most during the pandemic. Moreover, targeting only middle-class section will not be enough as in order to draw India out of this technical recession the government needs to promote employment and for this the corporate and manufacturing sector needs another mammoth relief and will pave the way towards a more stable and financially independent India.