10 things India wants from Nirmala Sitharaman’s Budget

While India is rebounding at the quickest pace among major economies this year, finance minister Nirmala Sitharaman will need more than just stimulus to keep this run sustainable. A string of state polls next month and a Covid variant only makes her task challenging.

1. Economists are rooting for a gradual fiscal consolidation path, capital expenditure to pursue growth and steps to rein in inflation. The year-on-year projection of fiscal deficit should not be significantly large, they feel. They want the FM to take capex route, and preferably spend on capital assets and infrastructure projects, rather than raising allocation to rural-centric cash or employment schemes.

2. Economists also want the re-introduction of wealth and inheritance tax to address rising inequality in Covid. A joint study by Ashoka University and think tank CBGA pitches for re-introduction of these taxes, while providing incentives for charitable donations. India’s richest families saw their wealth reach a record high in 2021, even as 84% Indian households saw an income decline amid the pandemic, said a report from Oxfam India.

3. The amount of standard deduction is significantly low given inflation and a variant on loose. Home budgets have been hit badly. There is a need to consider increasing the current standard deduction limit of Rs 50,000 to at least Rs 75,000 to provide some cushion to the salaried to sail through these times.

4. Keeping in mind that work-from-home or WFH is here to stay, the salaried class expects a deduction for home office expenses in calculating their taxes in Budget 2022. From a cost perspective, employees clearly need a backing. With multiple members in a family working from home and with the need to accommodate online classes for children, the salaried class has also looked at moving to homes with larger personal spaces. The additional cost may vary, but clearly there is an additional ongoing i ..

5. Insurance experts want health covers slotted in the 5% GST slab to make it more affordable to access quality healthcare. A significant reduction in the GST on all personal lines of products—from the existing 18% to 5% will encourage more people to buy health insurance in these times. For senior citizens, it should be exempted.

6. Automobile sector wants electric vehicles to be put in priority lending to encourage more citizens to opt for EVs at low interest rates. It also wants sufficient fund be allocated for R&D in a public-private partnership mode for development of batteries. In its Budget wish list, the Society Of Manufacturers Of Electric Vehicles (SMEV) also said there is a need to amend the PLI scheme for automobile and auto components, as in its current form there is an “unfair price disadvantage” for small and medium-size EV players.

 

7. The hospitality sector wants GST input tax credit restored as it struggles with thin margins, huge losses, and loss of livelihood for thousands on the back of dine-in bans. It also wants a mechanism to protect restaurants from further lockdowns, such as insurance or a furlough scheme such as the one granted in UK. The British Treasury announced a package of grants and other relief amounting to 1 billion pounds ($1.3 billion) to hospitality and leisure businesses in December 2021, as pubs, bar ..

 

8. Banks and MSMEs industry representatives want support for the sector in line with the Emergency Credit Line Guarantee Scheme – a measure introduced early in the pandemic. The ECLGS entails 100% credit guarantee by the National Credit Guarantee Trustee Company on loans extended by banks and non-banking financial companies. MSMEs also want the Insolvency and Bankruptcy Code to be amended for recovery of MSME dues.

9. FMCG companies such as giant HUL want Sitharaman to not be in a rush to bring down the fiscal deficit but continue to put money in the hands of people, especially in rural areas where FMCG growth volume has turned negative. With inflation of commodity prices impacting rural consumption, they want all the relief provided by the government in the last few years for the rural consumers through schemes like MGNREGA and free food supply to be extended in the next fiscal because the economy is stil ..

10. Pandemic-hit airlines wants tax breaks and suspension of minimum alternate tax for at least two years. The airline industry says that they are taxed as high as 21% but there is no provision for input tax credit, as there is with other sectors. It wants suspension of minimum alternate tax (MAT) for aviation and airport sector for at least two years, or reduction in MAT from about 18% to 5%. Domestic passenger numbers plummeted 25% in the first week of January. Rising fuel prices are set to further stress the sector, as fuel accounts for up to 45% of the cost of operations for airlines in India

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