Budget 2021: Scope for tax concession very limited, higher capex may be focus, says EY
The scope for tax concessions in the upcoming Budget next week is very limited, and the finance minister may prefer to inject stimulus into the economy through increased expenditure, mainly in infrastructure, EY India Economist D K Srivastava said on Wednesday.
In the pre-budget session on 2021-22 Budget, EY India Chief Policy Advisor Srivastava said the fiscal space available to the finance minister is extremely limited and therefore if she has to choose the most optimal route to support growth and any possible concessions on the tax side, that would be quite limited.
'Preferred stimulus injection may be through expenditure route'
"...If that (tax concession) happens possibly some of the sectors can be related to, could be the real estate sector and construction sector broadly where some of the incentive measures could yield positive benefits. But I feel the scope is very limited. On the other hand, the preferred stimulus injection may be through the expenditure route," he said. Source: PTI
'Government could relax the fiscal deficit target'
'Spending has to be raised'
The government has to raise spending, especially capital expenditure, to an "unprecedented" level, he noted. "Therefore, in our projection, we have said that capital expenditure must grow at rates not below 20 per cent for current and next year in order to come back to the plan of National Infrastructure Pipeline. Source: Zee news website
Sustainable growth story
Low revenue mop up
Fiscal deficit may be revised
The 2020-21 Budget had pegged the fiscal deficit for the current financial year at Rs 7.96 lakh crore or 3.5 per cent of the GDP. These figures, however, may have to be revised significantly in view of the economic disruptions created by the coronavirus pandemic. Fiscal deficit had soared to a seven-year high of 4.6 per cent of the GDP in 2019-20. Source: PTI