Budget 2020-21: Here are key economic challenges facing Finance Minister Nirmala Sitharaman:
The Budget 2020 comes at a time when the economy is struggling against a prolonged economic slowdown and thousands of job losses amid weakness across sectors.
The government has said that it expects Gross Domestic Product (GDP) to grow at 5 per cent for Financial Year 2019-20, the slowest pace in 11 years, and it may prompt the finance minister to opt for extra spending to spur growth in the economy, said analysts.
Many economists expect the government to introduce bold fiscal measures to arrest weakening growth, as aggressive monetary easing by the RBI has resulted in little relief for the ailing economy.
The government has set an ambitious target of making India a $5-trillion economy by 2024. The economy needs to expand at a rate above 8 per cent to create enough jobs for the more than 1.2 crore youngsters entering the labour force each year.
The government has in the past few months announced a range of measures, such as a big cut in corporate taxes, and announced a Rs 102 lakh-crore project pipeline in infrastructure to kickstart the economy.
After steep cut in corporate tax rate cut many analysts expect the government to cut personal the government is likely to trim personal income tax rates and cut the tax on long-term capital gains from equity investment, in a bid to spur economic growth, news agency Reuters reported citing government officials.
The government is also likely to fail to achieve its disinvestment target of Rs 1.05 lakh crore as receipts from disinvestment in the year to March are expected to be between Rs 50,000 crore and Rs 60,000 crore, news agency Bloomberg reported.
The government's budget deficit could widen to 3.8 per cent of gross domestic product (GDP) in the current fiscal year, breaching a target of 3.3 per cent, news agency Reuters reported earlier quoting a senior official.
Finance Minister had in last Budget presented in July last year stuck to maintaining an ambitious target of containing the fiscal deficit at 3.3 per cent of GDP.
Meanwhile Prime Minister Narendra Modi has sought suggestions and advice from 130 crore Indians for Union Budget 2020.