Budget 2018: Four key macroeconomic expectations from FM Arun Jaitley


2018 Budget: While India anxiously awaits the 2018 Union Budget, Finance Minister Arun Jaitley has the overwhelming task of managing the country’s fiscal prudence and, at the same time, providing relief to the sectors that have been affected by the reforms.

structural In the next Budget of the Union 2018, the first after the implementation of GST, while Finance Minister Arun Jaitley can not play much with the different heads of indirect taxes, since any decision on indirect taxes on goods and services now is taken by the GST Council, the budget can still address key issues related to GST. The government could rely on non-budgetary funding sources to finance the government’s ambitious programs on railways, roads and waterways. Let’s look at the main macroeconomic expectations of the next 2018 Union Budget.

Change from monetary policy to fiscal

In the next Budget of the Union 2018, Finance Minister Arun Jaitley could resort to fiscal policy, ie. use taxes and policies related to public spending to stimulate GDP against monetary policy tools, such as the use of interest rates. “This budget could mark a decisive shift from monetary policy to fiscal policy as a means to stimulate GDP growth, since global central banks are likely to increase rates, the RBI may have little chance of cutting rates. Therefore, this budget could focus heavily on reducing the tax burden for the middle classes and also use government spending on infrastructure and agricultural income as a means to give a big boost to growth, “Angel Broking said in a note. recent.

Small savings rates

The government has reduced interest rates on PPF as well as RBI bonds. Finance Minister Arun Jaitley will seek to ensure that the vast middle class and senior citizens, at least, end up being neutral buying power, analysts say. “We could also see the special tax status of many of these withdrawn instruments to avoid the distortion of the yield curve, so many conservative middle-class investors could end up losing profits.” The government will be aware of this fact when entering the market. Union Budget – Expect specials for retirees and a greater tax exemption for NPS You can also improve the limits under Section 80C and Section 24, as well as the limits in Section 80D, “said Angel Broking.

Focus on rural spending

The Finance Minister, Arun Jaitley, will look for ways and means to increase job creation in rural areas, say the main voices of the market. “Agricultural growth continued to drag the GDP estimates and the government seems to be far from doubling agricultural incomes by 2022. Expect a variety of reforms in the budget Wait a big boost to rural employment generation programs and a big boost to rural infrastructure Expect more decisive policy measures on agricultural pricing, agricultural imports and agricultural exports There could be positive announcements for support services to prop up agricultural income, such as fertilizers, agrochemicals, hybrid seeds, drip irrigation systems , etc. “, said Angel Broking.

The infrastructure spends

It is expected that the government will continue to provide the necessary infrastructure boost to put the country on the path of growth. Finance Minister Arun Jaitley had previously indicated that the government increased its allocation to infrastructure. “In recent times, the government has increased spending on infrastructure,” he said, adding that the 2017-18 budget made an allocation of Rs 3.96 lakh crore for the infrastructure sector. India needs to spend at least Rs 50 lakh crore in the next five years until the year 2022 to develop infrastructure, the country will see an investment close to 3,000 crore per day, according to a recent CRISIL report.