InvestorQ : What do you think will be the broad theme of the Union Budget 2020 when the FM presents it on February 01 this year?
prachi Patwardhan made post

What do you think will be the broad theme of the Union Budget 2020 when the FM presents it on February 01 this year?

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1 year ago
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This is certainly going to be a difficult budget for the finance minister because there are growth expectations and also there will be expectations from the public on tax cuts. Broadly, the budget will have to be based on five themes and I expect that the undertone of this budget will be actually built around these five themes only.

1) The budget will have to cut taxes on the retail tax payers, especially after the generous tax breaks given to the corporates in September last year. This could take the form of a higher taxable slab or lower tax rates or a mix of both.

2) The budget will attempt to improve spending power and also enhance savings value but giving greater exemptions under Section 80C and Section 24. In fact, housing thrust could emerge as a key theme for the Union Budget 2020.

3) The government, contrary to popular belief, may not allow the fiscal deficit to really weaken beyond a point. That is because higher fiscal deficit has larger implications for the bond yields and also for the sovereign ratings.

4) The government is likely to look at innovative sources of funding in this budget and that may also look at some off-budget funding, albeit with a limited time frame only as it is not well received by the investors.

5) Finally, the government may also look at a big thrust to infrastructure as a top-down approach to boosting growth and may look at measures like public private partnerships and also a thrust on developing debt markets.

The budget will have to walk the thin line between spending and ensuring that it does not go overboard.


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