Union Budget 2021: FM Nirmala Sitharaman may take fiscally prudent steps

The Union Budget 2021 to be presented on Monday is likely to give a prudent spending plan, notwithstanding the rising demand for a large fiscal stimulus.

Healthcare and job creation through infrastructure and Atmanirbhar Bharat, which seeks to promote domestic manufacturing across sectors, is likely to be the main focus area, and may see substantially increased public spending.

Sectors still reeling under the impact of Covid-19 may see some more relief package. Travel, tourism, hospitality and real estate may qualify for this as they have witnessed huge income and job losses.

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No major tax relief for salaried individuals is expected but Finance Minister Nirmala Sitharaman, who hiked the limit of the standard deduction from salaried income in her maiden Budget, may increase it further. Expenses incurred on work from home by employees during the pandemic may be taken care of.

Read: Budget 2021 key to address India's banking mess

Credited for the deft handling of the pandemic and an encouraging vaccination rollout, the government may propose to spend more resources and manpower on the inoculation drive. Allocation for healthcare services may be doubled in the Budget and frontline health workers may be rewarded with more allowances. Startups are likely to be encouraged for raising health infrastructure, especially in rural areas, with more tax benefits and tax holidays.

Sources in the government told DH that the Centre may come up with new avenues of job creation and income generation, as the pandemic has left deep scars on these fronts.

The services sector, backbone of the Indian economy, has been hurt badly due to social distancing norms. Travel, tourism and hospitality sectors, which provide jobs to nearly eight crore people, maybe given tax relief to get them back on track.

Also read: Sitharaman's 'Economic Vaccine' coming on Feb 1; will Budget 2021-22 go beyond 'bahi-khata'?

Real estate, which has seen most of the household savings being channelled in the past, has also been impacted by the pandemic. The Budget may come up with some ease in regulatory norms for the sector; measures to get pending projects completed may also be announced.

Aatmanirbhar Bharat (Self-reliant India), which seeks to promote domestic manufacturing across the sectors, will be the main focus area and could see more tax relief measures for promising investors. Those who come up with more job creation schemes may be given tax incentives.

Middle-income and salaried employees should not expect much in the current year, said a source, but added that the finance minister will try to leave some more income in their hands. However, a road map to implement the direct tax code, which seeks aggressive tax cuts for salaried individuals, may be provided in the Budget.

India’s rich and affluent must share the responsibility along with the government to sail India through the pandemic and hence, the Budget may levy a few new taxes or cess on them.