However, it will likely not deviate from the fiscal consolidation plan, they said.
Finance minister Nirmala Sitharaman will present her seventh budget on July 23, with the economy buoyed by high growth and robust revenue. Gross domestic product (GDP) expanded 8.2% in FY24, underscoring India’s status as the world’s fastest-growing major economy, while direct tax revenues are up nearly 20% this year so far, giving the government room to step up allocations or launch new programmes.
“Measures that would lead to direct job creation, including support for MSME, manufacturing and tech – seen as large employment creating sectors – are likely,” said one of the persons cited.
Sustaining Growth, with Focus on Technology
The emphasis will be on growth and job creation, with focused attention on new-age technology, including space tech. The budget is expected to stay the course on fiscal consolidation. In her interim budget in February, Sitharaman had pegged the FY25 fiscal deficit at 5.1% of GDP.
A dedicated fund for high-tech sectors and MSMEs, enhanced funding support for infrastructure sectors such as highways and railways, and women-related programmes such as self-help groups as well as the agriculture sector are on the cards.The budget is also expected to simplify the withholding tax regime with easier procedures and tweaks in rates.
It could also roll out more measures to make the Ahmedabad-based Gujarat International Finance Tec-City (GIFT City) more attractive to foreign investors. “With necessary regulatory framework in place, Union budget 2024 is expected to bring tax clarity for characterisation of securities listed on IFSC (International Financial Service Centre) exchanges, akin to deeming capital gains for FPIs (foreign portfolio investors) on mainland stock exchanges,” said Sameer Gupta, tax leader, EY.
He sought enabling regulatory and tax reforms to allow offshore holding company structures to relocate to India, similar to Gift-IFSC norms.
He also urged a framework for global commodity trading to boost India’s global financial hub ambitions, as recently recommended by an expert committee.
“Job creation is a priority with higher allocation for MGNREGA (Mahatma Gandhi National Rural Employment Guarantee Act) and PLI (production-linked incentive schemes) for labour-intensive sectors,” Care Ratings said.
Content Source: economictimes.indiatimes.com