What are the areas that are most likely to get the most focus in the budget? The final budget in full-blown form during the 2nd term the Prime Minister Narendra Modi’s government comes amid international headwinds, as well as macroeconomic issues in India, such as slowing growth, rising unemployment and high inflation. Finance Minister Nirmala Sistharaman will be under pressure to increase the allocation for social welfare , and to introduce new programs and schemes designed to attract voters in advance of state assembly elections in the coming year, and an important Lok Sabha election in 2024 The budget is likely to test her determination to be fiscally responsible.
Since this is a pre-poll budget with a political undertone, the strong political implication is expected. What are the industries which will likely to garner much interest in the budget? Will Sitharaman pay particular attention to the rural economy and agriculture like he did with previous budgets? Union Budget 2018-19 presented by the finance minister of the time Arun Jaitley?
The Union Budget 2018-19 Jaitley significantly increased the allocations for schemes such as Ujjwala Yojana along with Ayushman Bharat. Farmers were offered MSP that was one-and a half times the cost of production on the vast majority of rabi crop. A significant amount of money was allocated to offer gratis LPG connections along with electricity and toilets for the middle and lower classes. This led to impressive results in the elections of 2019. Are they going to let the Modi government be able to conduct similar efforts before 2020 general election? Here are a few major areas of focus to look for in the budget.
The cash assistance provided to farmers through the PM-KISAN scheme could to increase from the annual rate of Rs 6,000 to Rs 8,000 annually. The PM-KISAN scheme was announced in February of 2019, only two months prior to election day Lok Sabha election. In this scheme, 22,000 is paid out to the accounts of eligible farmers each year, three times. Two lakh crore of money was released over 11 million eligible farmers until December 2022, according to the official data.
The budgetary allocation for the Ministry of Agriculture & Farmers Welfare was at 1,24,000 crore for 2022-23. It is expected to increase significantly in 2023-24. The government could increase the amount of interest subsidies for credit for agriculture.
With over 65 percent of the entire population in rural India is the main factor in the electoral success. It is also vital to accelerate growth in the economy. It is expected to see an increased focus on the development of rural infrastructure and access to credit.
The allocation in funds for MNREGA has caused political acrimony during the past two years. The most significant allocation for MNREGA that was announced through the congress-run UPA administration in the year 2005 was the sum of 1.11 lakh crore over the course of 2020-21. The amount allocated to the scheme was increased by 55 percent percentage in FY21 to offer assistance to workers in poor areas affected by Covid pandemic as well as lockdowns. The allocation for the scheme was reduced to approximately 98,000 crore in 2021-22, and then to 73,000 crore in 2022-2023. Sitharaman is predicted to reverse the trend downward and significantly increase the amount allocated to MNREGA this year.
It is possible to see an important increase in allocation for the PM Awas Yojana. The 2022 Budget the Finance Minister provided the amount of Rs 48,000 crore for construction of 80 lakh homes under the scheme both in urban and rural. A significant increase in the allocation is also anticipated to develop infrastructure for rural areas as well as piped water, sanitation and other infrastructure.
Offering the free cooking gas containers for cooks under the Ujjwala scheme is believed to have brought massive electoral advantages to the ruling BJP during this year’s general elections as well as state elections. The allocations will likely be higher for schemes that are that deal with education, healthcare and women’s safety. Fiscal incentives specifically for women are available included on the card. These could include tax reductions on the purchase of assets like houses, cars that are owned by women.
The most optimistic hope of people of the middle classes, which is always from the union budgets is tax relief. As of now the Modi government hasn’t provided any significant relief for taxpayers of income. The rates of income tax for individual taxpayers have not been changed since 2017-18. The only change that’s been made in the last few years was the establishment of the “new tax regime’ within the union budget of 2020-21. Sitharaman is likely to concentrate on making the tax regime more appealing.
“The primary focus will be on taxation without exemptions which is a straightforward straight, straightforward, lower tax rate with no exemptions. Perhaps that’s the direction in which the government will enhance rather than offer every kind of direct and indirect exemptions” C J George who is the director as CEO at Geojit Financial Services, told DHin an interview. Should tax-free relief be offered for those in lower income brackets it is possible there is a chance that finance minister could decide to offset revenue losses by imposing a cess/surcharge to the income bracket with the highest.
The support of manufacturing is vital to creating employment and for accelerating growth in the economy. India is making itself known as a potential option for China within the supply chain of global trade. The China-plus one strategy used by large international companies has helped India. The Finance Minister is likely to increase incentives for manufacturing to boost. In the Production-Linked Incentive (PLI) program that currently covers 13 industries is expected to be extended to other areas, such as the production of leather and non-leather bicycles, footwear, toys, vaccine materials , and telecom-related products.
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