Fiscal deficit pegged at 3.5%; Nominal GDP to be 10%; Capex scaled to 21%.
New Delhi: In a move to boost consumption for bringing the economy out of the worst slowdown phase, the government on Saturday announced some sops to cheer both corporate and aam admi in some way or the other, while at the same time, it widened budget deficit targets for the current and next fiscal years to help spur growth.
The most remarkable measures announced by the government in its Budget 2020 include, cutting personal income tax on lower slabs, raising deposit insurance to Rs 5 lakh from Rs 1 lakh at present, scrapping Dividend Distribution Tax (DDT) to encourage coporates for more investment, spending more on agriculture and rural sector, raising funds via listing of Life Insurance Corporation (LIC), pegging FY21 fiscal deficit at 3.5 per cent of GDP, etc.
Presenting her second Budget in Parliament, finance minister Nirmala Sitharaman said that the 2020-21 Budget was aimed at boosting incomes and enhancing purchasing power, stressing that the economy’s fundamentals were strong and inflation was well contained in the country.
As far as fiscal deficit is concerned, it is, however, expected that the government will miss its deficit goals for a third year, pushing the shortfall to 3.8 per cent of gross domestic product (GDP) from a planned 3.3 per cent in the year ending March this year.
“The deficit target for the coming fiscal year starting April 1 was widened to 3.5 per cent,” the finance minister said. For the next fiscal, she also pegged net borrowings of Rs 5.45 lakh crore and doubled target of raising revenue from the sale of government stake in PSUs to Rs 2.1 lakh crore.
Sensing a good economic health in next fiscal, the government also pegged the country’s nominal GDP growth rate at 10 per cent in the next fiscal and the capital expenditure is scaled up by 21 per cent to prop up the economy.
However, Sitharaman said, “Receipts for 2020-21 are pegged at Rs 22.46 lakh crore while expenditure at Rs 30.42 lakh crore.
The revised estimated expenditure for FY20 has been pegged at Rs 26.99 lakh crore and receipts at Rs 19.32 lakh crore.”
In a move to boost domestic manufacturing in the country, Ms
Sitharaman also raised import duty on a variety of products ranging from tableware and kitchenware to electrical appliances to footwear, furniture, stationery and toys, while at the same time, she provided funds to help farmers set up solar power generation units and set up coal storages to transport perishables.
Keeping labour-intensive sectors in MSME as critical for employment generation, the finance minister also pointed out that cheap and low-quality imports are an impediment to their growth.
“Special attention has been taken to put measured restraint on import of those items which are being produced by our MSMEs with better quality. Keeping in view the need of this sector, customs duty is being raised on items like footwear and furniture,” she said.