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Budget 2019: What to expect out of interim budget or vote on account

While some reliefs that no political party can dare to roll back (like raising exemption limit for individuals under Income Tax Act) some relief measures for rural population etc can be expected.

January 19, 2019 / 11:06 AM IST
Mumbai: People look at a screen displaying the stock prices on the facade of the Bombay Stock Exchange (BSE) building in Mumbai on Monday. The market plunged by over 100 points in early trade at the begining of the year. PTI Photo by Mitesh Bhuvad  (PTI1_2_2017_000042B)

Mumbai: People look at a screen displaying the stock prices on the facade of the Bombay Stock Exchange (BSE) building in Mumbai on Monday. The market plunged by over 100 points in early trade at the begining of the year. PTI Photo by Mitesh Bhuvad (PTI1_2_2017_000042B)

Dhiraj Relli

Propriety demands that not too many changes should be made in a vote on account or interim budget. This is all the more true as the vote on account (on February 01) will precede the unveiling of the Direct Tax code report on February 28. Tinkering with the tax rates or tax provisions before the release of the report will lead to avoidable controversies.

While no political party can dare to roll back some reliefs (such as raising exemption limit for individuals under the Income Tax Act), relief measures for rural the population can be expected. We do not foresee any measures having substantial impact on businesses. While the speech may include a vision statement for the next 3-5 years, its implementation will be postponed to the new government.

Shortfall in GST collections (despite customs duty revenues being better than budgeted, net indirect tax receipts till November were only 49.4 percent of estimates compared with 57 percent last year), telecom sector revenues, divestment revenues and some shortfall in direct tax receipts (going by the caution displayed by CBDT chairman recently) could upset the targeted budgeted revenues. This might happen at a time when the expenditure may overshoot budgeted numbers (including fertilizer subsidies which alone could be closer to Rs 1 lakh crore vs Rs 70k crore budgeted). While some shortfall may be recouped from higher RBI dividends, a minor overshooting of fiscal deficit (easily justifiable as usual, due to unpredictable events) is likely unless severe expenditure cuts are undertaken (which does not seem likely ahead of general elections).