Arun Jaitley May Hike Service Tax Rate in Budget: Mihir Vora

Mihir Vora, director & chief investment officer with Max Life Insurance, expects the government to address the stress in the rural sector by increasing outlays for various development schemes.

"The budget will be incremental with a focus on rural economy," he told NDTV Profit.

The maximum signs of stress are in the rural sector of the Indian economy because of bad monsoons and signs of fatigue are visible there, Mr Vora said.

"There will be a lot of focus on rural economy in terms of words and outlays which is not a bad thing. We may see increase in outlays to employment guarantee schemes, irrigation schemes, rural roads and rural housing projects and probably widening and deepening of crop insurance schemes," he added. 

Apart from focus on rural economy, Mr Vora expects the government to hike service tax to around 16 per cent which is closer to the revenue neutral rate of 18 per cent under the proposed goods and service tax regime.

He expects the government to achieve its fiscal deficit target of 3.9 per cent of GDP for the current financial year on the back of bonanza due to lower oil prices. However, he says for FY17, government might miss the fiscal deficit target to provide for capital expenditure.