Union Budget 2018-19 will be the first post-GST budget of India. It is also the last full budget before the 2019 general elections and will most likely be presented on 1st February 2018 by Finance Minister Arun Jaitley. The budget session is expected to begin on 30th January 2018; President Ram Nath Kovind will address the joint session of both the houses. The Economic Survey would be tabled on 31st January. This will be the fifth budget presentation in a row for Arun Jaitley.
After the budget-2017, which was referred as mediocre, this will be the last full budget of Modi-led NDA government for this term. Different sectors have high expectations for the much touted economic reforms. Let’s take a quick look at what can be expected from this new budget-
Tax Structure- This year, the indirect tax structure of the country was given a facelift with the new Goods and Services Tax (GST) regime. And in Union Budget 2018, we can expect changes in the direct tax structure including income tax. The current government opines that the tax base in the country needs to be widened to curb tax evasion. Also, the tax rates need to be rationalised. To review the existing structure of direct taxes in the country and the related exemption norms, a task force has been created by the government which is headed by CBDT member Arbind Modi. The idea is to make direct taxes more contemporary so that it matches the current requirements.
Infrastructure- Infrastructure is also expected to be a priority in the upcoming Budget 2018. Arun Jaitley said that the government wants to maintain the momentum at which new infrastructure is being developed in the country. The new budget will put impetus on developing rural infrastructure. Under the Bharatmala project, the biggest ever highway development plan has already been approved by the government. Urban infrastructure, housing, water and sanitation needs are also expected to be discussed at the new budget announcement. Now that the Railway Budget has also been merged with Union Budget, railway infrastructure will also be an important topic. There is urgent need for investment in railway infrastructure along with the framework of stations and trains.
Recapitalisation of Public Sector Banks- A mega recapitalisation plan was announced by the government in October to counter the rising bad loans of public sector banks. The plan is worth Rs 2.11 Lakh Crores out of which Rs 1,35,00 crore will be in the form of front-loaded recapitalisation bonds. Though the government has not shared the details on the types of bonds or the interest rates on these bonds, the news itself has created quite a buzz in the bonds and equity markets. The government is expected to raise around Rs 70,000 crore by February 2018 and the budget will also be announced in the same period.
Apart from these major reforms, several economists are urging the government to cut corporate tax rates in order to make the Indian industries competitive on a global level.