Boosting demand in the economy by putting money in the hands of the consumers is likely to be the main thrust area of Union Budget FY23.
Among the discussions held at North Block, the government is keen to boost demand amid waves of the Covid pandemic. The idea is to put discretionary money in the hands of the consumers and taxpayers so that they can go out and buy goods and services.
The concern in policy circles is that demand is sluggish and after several incentives to the industry to enhance production, the focus is now on how to increase demand.
Mostly, the corporate tax rate structure and production incentives are in place, and leaving more money on the table for the taxpayers is the next logical step.
Household budgets are severely cramped by the pandemic, as economic activity has been oscillating through highs and lows. Industry and employees have both been trying to navigate the uncertainty brought about by Covid waves and lockdowns along with restrictions on mobility and economic activity.
For this, it has been discussed to raise the Section 80C ceiling for tax saving schemes to Rs 2 lakh from Rs 1.5 lakh, which will leave more money in the hands of the taxpayer and also stimulate savings.
It is expected that the Budget may provide an increase in deduction available under Section 80C, rise in housing loan repayment exemption etc.
Simply put, the taxpayers’ expectation is more money in hand.
In addition, the Budget may announce at least a 10 per cent rise in healthcare allocation given the Covid scenario and rising requirements of public intervention.
It is also expected that the Budget will focus on infrastructure development, exports, health and sanitation expenditure, and provide a detailed roadmap for disinvestments.
