GDP
growth of India has not lived up to the expectation as per the Finance budget
2012. The Fiscal Deficit of India is ever increasing and a threat of India
moving to Junk status, the government will be looking to cut down unnecessary
expenditures and come out with a stimulus package to spur the growth in the
country similar to one during the 2008 recession. 2013
will be a political turnaround year as it’s a year before the elections and
government will look to utilize these opportunities.
With
the Income Tax Act moving more in lines with Direct Tax Code and increase in
disposable income, there is an expectation that the Basic Exemption limit would
be raised to Rs 2.5 Lakhs and an increase Sec 80C limit to Rs 2,00,000. There
is a need to increase the medical expenditure limits u/s 80D and Provision to
section 17(2) as medical facilities are not cheaper anymore. There is
likelihood that Sec 80CCF may be reintroduced in the lines of infrastructure
bonds over and above Sec 80C.
Moving
on there is still no clarity on implementation of DTC, GST and Companies Bill.
These acts have to be well integrated before they can be implemented. The
current situation of standoff between the state and central government may see
the implementation process being delayed.
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With
the FDI in various sectors being opened up, certain benefits will be provided
in form of additional depreciation, land allocation, tax holidays or specific
exemptions to encourage their setup. The manufacturing sector may get added
boost in the budget as industry specific tax sops may be provided by the
government. (Eg: Automotive industry)
The
Indian Banking sector has been reaching out to more people in rural areas and a
considerable amount would be set aside
for capital infusion in to PSBs. The allocation for Defence has been ever
increasing and 20% additional allocation may take place over previous years
budget.
Rs
20, 000 crores may be set aside for Direct cash transfer scheme and additional
amount may be allocated to aadhar scheme. There will be considerable allocation
for Infrastructure sector for
development of Railways, Road transport, education and so on. Schemes such as
NREGA need to be scrapped as they are meaningless.
The
budget will require to address key issues on fiscal deficit, inflation,
depreciation of rupee and lead an accelerated growth in India s
development. 2013 is a crucial year for
India and the budget will play a key role to it.
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