Union Budget expectations

The main areas of concern are inflation, public finance, national income, market monetary mechanism, job creation and investment scenario. Focus would also be given to the measures to liberalise domestic defence production.

It is expected that RBI will create framework for licenses of small banks and the Government would favour consolidation of PSU banks and giving greater autonomy to them while making them more accountable.  Implementation of Goods and Services Tax (GST) is going to be a landmark reform in the field of indirect taxation and can be a game changer for the economy.

The Government would continue to move on the path of fiscal consolidation which helps keep CAD in check and supports the rupee. Inflation targeting will allow RBI to cut rates. The Government would focus more on curbing supply side inflation by enhancing higher farm productivity and investment in infrastructure as this will ensure sustained low levels of interest rates. On the expenditure side, the government is expected to incorporate the interim recommendations of the Expenditure Management Commission headed by Dr. Bimal Jalan who is expected to have suggested expenditure reforms and provide a roadmap for rationalization of subsidies.

To tide over the fiscal cliff the Government needs to manage disinvestments better by setting bigger targets and putting in round-the-year effort. From the legislative perspective, the Government is likely to push its economic reforms agenda in the upcoming Budget session, by pushing for the passage of the bills related to 6 ordinances promulgated recently. The ordinances include those on coal, mines & minerals, e-rickshaws, amendment to Citizenship Act, land acquisition and FDI in insurance.