Budget must boost private investments: Motilal Oswal

By Motilal Oswal

The market is looking forward to the first Budget from the NDA government after being re-elected as it would set the foundation for the policies and reforms for the next five years.

The biggest expectation from the new Finance Minister is to revive growth and bring the economy back on track. There has been an increasing pressure on the government to increase spending and to defer the fiscal deficit targets. However, going by the past track record of the NDA government, we expect the fiscal prudence to be maintained.

The BJP election manifesto provides some perspective in the government thinking and its policy framework. The manifesto focuses on continuity of the key reforms started earlier like – Housing, health, education for all, Make in India, MUDRA scheme, various incentives to farmers, etc. The manifesto promised to invest INR100trillion in infrastructure over the next five years, the details of which could be presented in the budget.

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The government needs to ensure that private investments also picks up as that would be a key driver for long term economic growth. Some of the other key factors to look out for in the budget would be the investment plans for job creation, increasing tax compliance, simplification of GST, attracting foreign investments, divestment plans, recapitalization of banks, etc.

Also Read: 'Economic reforms must continue'

In the first budget presented during the previous regime, the Finance Minister had proposed to reduce the corporate tax from 30% to 25%. The government gradually extended this benefit of 25% tax slab to businesses with Rs 250 crore in sales, However, the large companies with sales above Rs250 crore contribute the bulk of the corporate tax collections and continue to remain in the 30% tax slab. Any relief to these large corporates could help in boosting investments as well as corporate earnings.

The market would cheer if the budget is able to deliver on these expectations and presents a strong reform agenda for the next five years.

The author is, Chairman & Managing Director at MOFSL