Budget 2021 is the most crucial financial element of the year. It decides the movement of funds and type employment generation opportunities within the nation. It decides which industry will benefit in the year. The budget is the determination factor for the movement of funds from international investors as well. Various industries decide their investment strategies on the basis of the financial aspects laid in the budgetary policy. The budget of 2021 is filled with a lot of expectations due to the recent COVID outbreak and the people are very hypothetical on the budget outcomes.
From common people to the Indian industries everyone is expecting a relief in taxes and progressive budget in their own terms. Common man is expecting employment generation opportunities whereas industries are expecting lower tax rates. Poor are expecting better disbursement of food and capital benefits and the Conglomerates are expecting cheap import duties or import reliefs for better business. Also the FinMin Nirmala Sitharaman has given the statement, “The budget 2021 is going to be a very important budget. It is designed in a way that no one has imagined. It will be the best budget till date and such a budget wont have ever surfaced in 100 years of history.” Hence the budget of 2021 is going to be a very crucial deciding factor for the upcoming trend is the market as well.
Date and Other Unique Features of Budget
The budget 2021 is going to be made public on 1st February, 2021. The updates on budget are planned to surface online through a mobile application for the first time in history. For this purpose the government has launched an application named “UNION BUDGET”. Hence FinMin will address the nation virtually on news channels as well as mobile applications. Also the budget is going to be a paperless budget. Given the current scenario of COVID situation the ministry has decided to make the budget paperless and every parliament member will receive a soft copy of the same. Also the HALWA tradition is done hence the budget is ready now and the date is awaited for its representation.
Expectations from Common People
The common man is the single entity who has suffered the most due to this lockdown. There has been a lot of capital and job erosion and people have lost all their savings or jobs due to such situations. The expectation from common man from the budget 2021 have been subdivided under :
Expectation from Various Deductions
The common man is expecting that the government will plan a range of deductions and revise them so that the 2020 loss can lessen. The people expect that the government will provide more standard deduction for the salaried employees. The standard deduction act is in force since 2018 and has been capped at 40000 Rs. The deduction has increased to a limit of 10000 Rs. in the past 3 years. Hence the people expect that they will get a better rise in the standard deduction limit so that their annual income gets some relief from taxation.
People expect that the government will increase the deduction limit under 80c as well. Last revision was done in the year 2014 and since then the limit is set at Rs. 1.5 lakh. The expectation is to push the limit to at least Rs. 2 lakh.
Section 80DDB is also a concern due to COVID expenditure. The section stands for expenses done for serious illness. People expect that COVID also gets qualified under serious illness or atleast the expense under COVID gets classified under such section. This will help the people to get some relief from the expenses done on the hospitalization or medicinal charges relating to COVID.
Expectations from LTA and Capital Gains
The Leave Travel Allowance (LTA) should also get updated. The tourism industry has taken a serious hit and to revive it the government may change the LTA restrictions limited to domestic fares and upgrade it to spending done on accommodation and tour fares as well.
The capital gains is a debatable factor since the last budgetary decision. The capital gains are diversified into short term and long term capital gains. They are based on the tenure of the investment made by an individual. The government should reduce the taxes implied on the capital gains. Also the govt. should revise the timeline for capital gains presented recently under section 54.
Expectation from Corporates and Industries
The corporates and many sectors of the Indian industry have suffered huge losses on account of the lockdown hit. There are sectors which have not yet revived from this hit. The startups or the MSMEs which started in 2020 are the major losers due to the COVID situation. They suffered huge capital losses and cannot generate required sales which resulted in loss making and high interest payments. Also the stoppage on imports and exports have caused a major blockage to the corporate houses and their business channel. Hence they all together expect a huge relief amount from the government in the form of various measures. Sector wise allocation is provided :
MSMEs account for more than 6 crore business groups in the entire Indian economy. They are the sole major beneficiaries under the MAKE IN INDIA movement. This group has suffered high erosion in sales and hence have become debt ridden business houses. The expectation from budget 2021 is regarding the export policy. These MSMEs report nearly 50% of the export and hence they need some relief in export policy of India so that they can increase their offshore business and cover the losses occurred during the COVID situation.
This sector has recovered heavily due to the Diwali schemes and new year celebrations. The industry leaders have fueled up their business but they expect more demand driven measures. This will enable them to compete with the foreign brands that are commencing their business in India.
The FMCG sector is not the victim of heavy losses. Yet the major problem created is in the supply chain management system. The COVID situation has disrupted their channels for supply and acquiring raw materials. They expect better import policies or transport policies to rebalance the raw material requirement and also expect for more demand creating measures so that their business can get in order.
This sector expects a large amount of relief packages from the government in the budget 2021. Major domestic players have now been out of business or have very high interest payments pending. Also the capacity of the flight members is going up and down like a flight in turbulence. Hence the sector expects a stable policy and a good relief package from the government for its economic recovery. Another reason is that the business to many major countries offshore has been cut down. This is the result of new strains of COVID emerging worldwide.
Other General Expectation from the Government
The people of India have not suffered much fatality rate but this outbreak has suggested a weak health infrastructure in India. Hence the government should increase its spending on the health infrastructure for better addressing the health requirements of the people.
The lockdown has resulted in job erosion of many people. Hence the budget can provide a number of measures for the corporates or industrial houses in a way that they boost the generation of additional employment opportunities. This will provide the common people with better earning opportunities and to get back on the standard of living followed in PRE COVID time.
Another shortcoming is the underdeveloped education infrastructure. The government should definitely increase its spending on this sector. It should also focus on making it an Ed-Tech industry for better growth of the young minds.
The government can impose a COVID cess on conglomerates earning very high. This can help the government to increase its spending on underdeveloped sectors like the education and health sector.