The budget-making team of the Finance Ministry is short of two key officials, including a full-time expenditure secretary, while the preparation for the second budget of Modi 2.0 government has shifted into top gear. The budget for 2020-21 to be presented on February 1 is keenly awaited for the expected second wave of structural reforms for pulling out the economy from its over six-year low growth of 4.5 per cent.
In addition to expenditure secretary, the position of joint secretary (Budget), one of the key officials in the entire Budget-making process, is also vacant for almost three months.
The post of Expenditure Secretary fell vacant after the appointment of G C Murmu as the first lieutenant governor of the newly-created Union Territory of Jammu and Kashmir. Murmu relinquished the post of Expenditure Secretary on October 29 and subsequently, the additional charge of the Department of Expenditure was given to Atanu Chakraborty.
Chakraborty, a 1985-batch IAS officer of the Gujarat cadre, is Secretary Economic Affairs in the Finance Ministry. After over one year stint in the Department of Investment and Public Asset Management (DIPAM), Chakraborty was appointed Economic Affairs Secretary in July this year in a major bureaucratic reshuffle.
The finance ministry kick-started the exercise to prepare the annual budget for 2020-21 from October 14 with pre-Budget/RE (Revised Estimate) meetings. The series of meetings with different departments and ministries concluded last month.
The Budget Estimates for 2020-21 are provisionally finalised after the Expenditure Secretary completes discussions with other secretaries and financial advisers. The second budget of Finance Minister Nirmala Sitharaman is considered to be crucial as it will come in against the backdrop of a slowdown in the economy.
The Reserve Bank in its monetary policy last week downgraded the growth forecast for 2019-20 to 5 per cent from the earlier projection of 6.1 per cent. To beat the slowdown, the Finance Minister has said reforms to boost the economy would continue and also hinted at tweaking personal income tax rates in the upcoming Budget.
The government is examining the direct tax code (DTC) report concerning Personal Income Tax. It is considering the rationalisation of the personal income tax rate for boosting consumption.
Following the reduction in corporate tax in September, there has been a growing demand for a slash in the personal income tax to buttress consumption. In the biggest reduction in 28 years, the government in September slashed corporate tax rates up to 10 percentage points as it looked to pull the economy out of a six-year low growth with a Rs 1.45 lakh crore tax break.
Base corporate tax for existing companies has been reduced to 22 per cent from 30 per cent, and to 15 per cent from 25 per cent for new manufacturing firms incorporated after October 1, 2019, and starting operations before March 31, 2023.
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