Ahead of the upcoming budget on July 23rd, a recent research report by the State Bank of India (SBI) outlines critical areas requiring attention to foster sustainable economic growth in India. The report stresses the importance of maintaining fiscal prudence while continuing on the path of fiscal consolidation, proposing a fiscal deficit target of approximately 4.9 percent.
Regarding taxation, the report suggests aligning personal income tax rates with corporate taxes and transitioning all taxpayers gradually to the New Tax Regime for relief. It also advocates for tax parity in bank deposits to encourage savings and enhance household financial savings.
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Union Budget should focus on fiscal prudence, tax restructuring, agriculture reforms: SBI Research
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In agriculture, the report underscores the necessity of addressing financing and livelihood support, alongside reforms to the Minimum Support Price (MSP) mechanism. It highlights the politicization of MSP and recommends exploring alternatives to enhance trade competitiveness and reduce disputes.
For minerals, particularly critical ones, the report recommends developing a comprehensive strategy to generate employment and secure the supply chain from exploration to recycling.
While acknowledging reforms in the banking sector over the past decade, the report calls for continued reforms, including the divestment of public sector banks (PSBs) and stake sale in IDBI Bank.
It also proposes amendments to the Insolvency and Bankruptcy Code and advocates for Production Linked Incentive (PLI) schemes to reduce import dependency for MSMEs.
By incorporating these suggestions into the upcoming budget, the government can set a robust foundation for sustainable growth, foster financial inclusion, and bolster economic resilience in the post-pandemic era.
