Budget 2020: Finance Minister Nirmala Sitharaman to present Budget today
Finance Minister Nirmala Sitharaman is set to present Union Budget 2020 on Saturday. As finance minister, this is going to Sitharaman's second Budget presentation. Finance Minister's Budget speech will begin around 11 am in the Lok Sabha. The Budget to be presented by Sitharaman will include a detailed statement of the estimated revenues and expenditures to be incurred by the government in a particular fiscal year. The duration of the Budget presentation is expected to be nearly 90 to 120 minutes.
As the Budget presentation comes amid an economic slowdown, expectations are high that the Union budget could provide the much-needed boost or balm-propel investments and demand and, most importantly, lift sentiment.
According to D.K. Srivastava, chief policy advisor, EY, growth in private final consumption expenditure is estimated to be at a seven-year low of 5.8 per cent in fiscal 2020. Growth in gross capital formation, indicative of the investment demand, has fallen by 3.3 per cent in fiscal 2020 compared to fiscal 2016. Export and import of goods and services witnessed a contraction in fiscal 2020 as compared to the double-digit growth achieved in fiscal 2019.
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Budget 2020: FM expected to raise spending to revive economic growth
Amid the slowdown, the government may opt for a spending stimulus in the Budget, with more funds allocated to infrastructure development and direct benefit transfer, instead of one through income tax concessions that will benefit a smaller section.
Prime Minister Narendra Modi-led party has also recommended adjusting rules on taxing equity market returns in the Budget, which if accepted, could attract more capital inflows into the stock markets.
Since coming to power in 2014, Prime Minister Narendra Modi has more than doubled food subsidies, making it the government’s biggest line item after defence.
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Budget 2020: What IMF says
As the country gears up for Sitharaman's Budget presentation, IMF Managing Director Kristalina Georgieva has said the Indian economy experienced some abrupt slowdown in 2019 due to turbulence in non-banking financial institutions and major reform measures such as GST and demonetisation. But it is not in a recession, she has added.
"The Indian economy indeed has experienced an abrupt slowdown in 2019. We had to revise our growth projections, downwards to four percent for last year. We are expecting 5.8 per cent (growth rate) in 2020 and then an upward trajectory to 6.5 percent in 2021," Georgieva told a group of foreign journalists on Friday.
"It appears that the main reason for this slowdown was the non-banking financial institutions experiencing turbulence," she said on the eve of Union Finance Minister Nirmala Sitharaman presenting the annual budget in Parliament on Saturday.
She said India had undertaken some important reforms that over the longer term would be beneficial for the country, but they do have some short-term impact.
The International Monetary Fund (IMF) Managing Director said that there is not a lot of fiscal space in India. “But we also recognise that the policies of the government on that side, on the fiscal side have been prudent. We will see how the reading of the budget, the submission of the budget goes, tomorrow,” she said.
In the medium-term, she said, the IMF remains optimistic about India. “This is why we see that upswing potential for the growth in the country,” she said.
Georgieva said that the current economic slowdown cannot be described as a recession. "No.... You're far from that. But it is a significant slowdown, not the recession," she said.
The IMF managing director noted that the consumption in India also slowed down and that contributed to the overall slowdown in the economy.
The IMF would be keen to see what India does to get relatively sound macroeconomic fundamentals to pay off in terms of better growth trajectory, she said ahead of the budget.
One thing that is important for India is that budgetary revenue has been below target.
"The country knows that. The finance minister knows it. They need to increase budgetary revenue collection so they can improve their fiscal position. I said it's tight on the spending side, but I also want to stress that there is room to improve collection on the revenue side," she said.
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