‘An act of walking the tightrope on fiscal deficit’

M.M. Murugappan

M.M. Murugappan  

While the government is walking a tightrope with respect to fiscal deficit, especially due to corporate tax cuts, despite higher receipts from the Reserve Bank of India (RBI), there was a case for a fiscal stimulus expected in the Budget, as the RBI has called for in the recent policy statement.

The government acknowledged its fiscal challenges, resorting to the escape clauses in the FRBM (Fiscal Responsibility and Budget Management Act) — pushing up the deficit to 3.8% in FY20 and 3.5% in FY21 — with total expenditure increase by 13% (higher increase in capex) resulting in incremental improvements.

While continuing to remain committed to the doubling of farmer’s income, the government has laid out a longer term plan for the agricultural sector, detailing 16 broad initiatives that would help achieve the government’s objective. The government’s move to make the sector market oriented through contract farming, land leases etc., provides a positive push to this sector.

The change in SARFAESI norms for debt recovery for the NBFC sector could aid in improving recoveries and help ease some of the stress in this sector. The changes made in income tax space may reduce the tax burden of a large section of the taxpayers. Overall, having taken cognisance of the challenges in the economy, the government has laid out its focus areas and policy direction. However, execution is the true measure of success.

(The writer is

executive chairman,

Murugappa Group)

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