The government in its Union Budget 2016 is likely to pleasantly surprise the income tax payers, with its eye on 'Aam Admi" reports CNBC-TV18’s Nayantara Rai quoting sources. According to her, the government also plans to hike the recapitalizing funds for the public sector banks.
Sources says hike in loan rebate, 100 percent FDI for asset reconstruction companies (ARCs) via the automatic route and sticking to fiscal deficit target of 3.5 percent are also on the cards.
The Budget is likely to raise the income tax slab – it could be hiked from Rs 3 lakhs from the current Rs 2.5 lakh, say sources. Other higher income payees may also get some relief.According to sources, there is also a possibility of hike in loan rebate to revive housing market, say sources. The interest exemption on home loans currently is at Rs 2 lakh.
After the torrid earnings by public sector banks in the third quarter, the government is looking at hiking the recapitalisation funds for public sector banks from Rs 25,000 crore to Rs 30,000 crore, say sources.
Moreover, there is a possibility of allowing 100 percent FDI for asset reconstruction companies (ARCs) via the automatic route, say sources. (100% FDI for ARCs was already there but not through automatic route). This could be a big game changer and hlep the non-performing asset (NPA) problem of the banks.
Meanwhile, the government is very keen to stick to its fiscal deficit target of 3.5 percent and so could move Fiscal Responsibility and Budget Management (FRBM) roadmap if required and look at spectrum auctions to provide impetus, say sources. The government is also likely to reduce 7 th Pay Commission allocation by Rs 15-25,000 crore. The initial amount is Rs 75,000 crore.In an interview to CNBC-TV18, Ashvin Parekh of Ashvin Parekh Advisory Services, said the possible move for higher recapitalisation of public sector banks is a very welcom news, the reason being, earlier there was a reason being that in a 5 year span, the government will really recapitalise the public sector banks by Rs 70,000 crores and next year there will be an allocation of Rs 25,000 crores. So, if it improved to anything more than Rs 25,000 crore then its only welcome particularly considering the NPAs which are now coming out of the system and ofcourse the regulator is requiring the banking system to clean all your books. However, he said: "I would believe that the government needs to find some other ways to fund the public sector banks."
Spekaing on the possibility of 100 percent FDI for ARCs via automotive route he said: “If India wants more foreign capital or risk capital to flow into the ARC space then this is a very welcome move.”For the entire discussion, watch video.
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