The union budget is presented by Finance Minister Nirmala Sitharaman on February 1, 2020 . This is the first full year budget after the people selected PM Modi’s BJP party again in the elections for which the result has been declared in May 2019.
Key challenges to face by the government
- The first and the biggest challenge for central government is economic slowdown. Economy is struggling due to economic slowdown for which the government must take certain measures in order to handle thousands of jobless peoples and boost the certain specific sectors by investing more money into it. As per the recent figures released by the ministry of statistics, government expecting country’s GDP to expand 5% in financial year ending March 2020 which was 4.5% in the quarter ending September 30,2019.
- The cutting of personal income tax rate for the salaried individuals is the second biggest challenge for the central government. Many of the economists and financial experts feel that reduction in personal tax rate will save people taxes and the more tax saving will influence the people to spend more money. Spending more money may revive the demand and take the economy on track. Few economists also argued that it does not guarantee that the demand will revive or not. It is difficult to say that whether the government is planning for such a move as they already slashed rates of corporation tax last year.
- Other challenge coming in front of central government for Union budget 2020 is boosting certain specified sectors. Government need to take certain specific measures in order to boost the weak sectors like Telecom, real estate, discoms and non-banking financial companies. Boosting of these sectors are necessary in order to revive the overall demand growth.
- Boosting of manufacturing, infrastructure and construction sector is the other biggest challenge central government need to face in upcoming budget 2020. As per the data released by the government on Tuesday, manufacturing sector grows only 2% (lowest in the past 13 years) and construction industry at 3.2% which results in massive losses for manufacturing and construction industry. It’s expected that government will take measures to boost manufacturing and construction sector as the situation is very much deteriorated.
- As per the current situation, it is not expected from the government that they may bring more expensive reforms. It is expected that government may rise their budget deficit to 3.8 percent of GDP in the current fiscal year crossing the target of 3.3% as quoted by senior official of news agency. Government may miss this target, if they face any war, collapse in form output or structural reforms with unanticipated fiscal implications.
- The other major challenge to be handled by government is the target of making India a $5 trillion economy by 2024. It can only happen, if the economy will expand at a rate of 8% creating enough jobs for youngsters (Approx. more than 1.2 Crore) entering labour force every year.
- Government also announced a big cut in corporation tax rates. A 102 Lakh Crore project for infrastructure is also in pipeline in order to kick start the economy.
Key Highlights of Union Budget 2020-21
Here are the key Highlights from Budget 2020 -
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