indian budget 2020 : Key things

indian budget 2020, live

India’s union budget 2020 on Saturday is Prime Minister Narendra Modi’s second opportunity in seven months showing downwards slope

Finance Minister Nirmala Sitharaman is fiscal steps which 

may include higher spending in rural areas and possible tax cuts.

The government is trying to square off its budget deficit  for 

the year through March to 3.8% of gross domestic product 

from a planned 3.3%..

(you can find this chart top of the page)

Sitharaman  had to contend with less tax revenue as the 

economy crippled, and lower-than-expected income from assets sales. this is why She forced to borrow more and poke 
the Reserve Bank of India (RBI) for more dividends to help finance the budget.

for this, we have to go to near past

What will happen after the merger of banks?

Due to the amalgamation of the banks, there will not be capital 

gain under section 47. so after that, the bank will merge and setoff the losses with the other bank with their profit .for that the income tax will not be there to support the consolidated fund of India .this is why they already transferred 1.76 trillion to the government 

.they will put it in the consolidated fund of India to maintain the balance. now the question is why provision increased?
It may be for future waiving off loan cause we can see the condition of the industries.
Due to that in the near future definitely interest percentage going to down. Yes, the repo rate needs to be decreased.

union budget 2020: fiscal deficit

The government achieved its hattrick its fiscal deficit for continuous three years. Economists in a survey predict Sitharaman will also widen next year’s target to 3.5% of GDP, even though a law on fiscal discipline mandates the government must narrow the shortfall to 3% by then.

Sitharaman may use a so-called ‘escape clause’ provided in the rules to expand the current year’s goal by half a percentage point, and also amend the law to push the 3% goal back by five years to support a slowing economy. Growth is likely to rebound to 6%-6.5% in the year starting April from an estimated 5% in the current year, according to people familiar with official forecasts.

To invoke the escape clause, the government will need to cite exceptional circumstances, such as a war, a collapse in farm output,

In a simple example if war happens buildings, houses, bridges, and other things definitely will be going to collapse.then govt may have an opportunity to built those which enable them to regain & square off those previous deficits.

this example is taken from THE INTELLIGENT INVESTOR

so from the above table, we can gain the fact that though in 2018 it overlaps targeted still showing decreasing trend growth.

Indian budget 2020,indian budget 2020-21:-

Borrowings

The government will probably boost borrowing to fund the wider fiscal deficit, with a Bloomberg News poll estimating likely bond sales of ₹7.8 trillion ($109 billion) for the year starting April. That would be higher than ₹7.1 trillion budgeted for the current year.

Fiscal hawks are warning against an expansion in spending they fear would push up yields and crowd out private investment. In our view, it is this sort of conservatism that is largely to blame for weak growth, say Bloomberg’s Economists.

Revenue

The slowdown in the economy effect tax for companies to boost investments mean the government will going to miss the current year’s nearly 16.5-trillion rupee tax revenue. where ICICI Bank Ltd. calculates a shortfall of 2.1 trillion rupees in income from taxes.

By that effect, the government will going to achieve higher income from next year, having fallen short of the current years of  1.05 trillion.

so if tax will not be given to the central bank can hold additional revenue. Besides that RBI pays dividends to the government every year,1.76 trillion for last year, including 52640 crores from its surplus capital, and IDFC First Bank estimates that it may pay around ₹1 trillion in the year starting April.

Expenditure

Spending cuts on account of a revenue crunch was one way the government tried to keep the fiscal deficit from increasing. Sitharaman may increase public expenditure next fiscal year. it is expected that spending in the rural sector, particularly around programs on job guarantees, affordable housing, health, education, and farm income will be taken by the govt

Also under consideration is subsidized short term loan for mobile-phone manufacturers, as the government seeks to attract the suppliers to Apple Inc. and Samsung Electronics Co.

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Hi, Myself CMA Mousam Roy having more than 5 years experience in commerce field,teaching field as well as professional field with working with PSU and big Firm.