Nirmala Sitharaman's second Budget clearly caters to the demand side of the economy by trying to put more money in the hands of individuals. Her Budget had three themes -- aspiring India, economic development, caring society.
While some see it as giving more goodies to the corporates by doing away with dividend distribution tax (DDT) and extending the restructuring window for MSMEs by a year, others point out that she has also brought in much needed reforms in deposit insurance as well as outlining a 16 point action plan to push agriculture and the rural economy.
What can be termed as a game changer in the Indian economy is her announcement on LIC going public through an Initial Public Offering (IPO).
Government will forego Rs 25,000 crore revenues by the abolition of DDT. This is the icing on the cake for the corporate sector, which was handed out a major corporate tax rate cut in September last year.
Sitharaman has also brought changes to the personal income tax regime — rejigging the tax slabs with optional benefits — as part of an attempt to make it simpler, though this comes with a caveat.
There will be no income tax for those with taxable income below Rs 5 lakh. A new income tax rate of 30 per cent is proposed for those earning income above Rs 15 lakh. For those with income between Rs 5-7.5 lakh, the tax rate has been pegged at 10 per cent. For those with an income between Rs 7.5-10 lakh, the tax rate is 15 per cent. The tax rate will be 20 per cent for incomes between Rs 10-12.5 lakh, and 25 per cent for taxable incomes between Rs 12.5-15 lakh. But to enjoy the new tax regime, the individual will have to forego the existing exemptions.
The Budget has also enhanced the deposit insurance for bank deposits to Rs 5 lakh from Rs 1 lakh now.
Sitharaman also announced that the Government plans to take insurance behemoth Life Insurance Corporation (LIC) public through an Initial Public Offering (IPO).
For 2020-21, Sitharaman has pegged the nominal GDP growth rate at 10 per cent, lower than the 12 per cent envisaged for the current fiscal. On expected lines, the fiscal deficit for the current fiscal has seen a slippage to 3.8 per cent, from the earlier estimated 3.3 per cent. Simply put, the fiscal deficit has been deviated by 0.5 percentage of GDP.
She has announced Rs 15 lakh crore as agriculture tax credit for 2021.
Sitharaman also announced a slew of measures for the health sector, education, energy, commerce and trade.