Page 38 - The Indian EYE 011725

BUSINESS & TRADE JANUARY 17, 2025 | The Indian Eye 38

UNION BUDGET 2025

Will the Govt go for fiscal consolidation,

tax simplification and tax the super-rich?

India is on the path of fiscal prudence as the government has spent around 52.5 per cent of

the budget estimate of its deficit in the first seven months of FY25

OUR BUREAU
New Delhi
s per the convention, the Budget for 2025-26
will be tabled on February 1, 2025. Discus-
Asions are already on about how to boost the
growth, with different sections of industry and soci-
ety giving their feedback. As India prepares for the
Budget, expectations are focused on a set of strate-
gic reforms that can propel the economy forward.
Global consulting and professional services
firm Ernst & Young India has emphasized on fiscal
consolidation, tax system simplification, and invest-
ment-driven growth, in the Budget 2025 as it will
“lay a solid foundation for sustained economic de-
velopment in India”.
According to EY India, key areas of focus
should be to enhance public expenditure, reduce
fiscal deficit, incentivize private sector investment,
and introduce targeted tax reforms to foster busi-
ness innovation.
Sameer Gupta, National Tax Leader, EY India,
said, “The Government has made significant prog-
ress in reforms over the last two terms. The focus Union Minister for Agriculture and Rural Development Shivraj Singh Chouhan meets Union Finance Minister Nirmala Sitaraman
now should be on accelerating and executing the as the government prepares to present Budget 2025-26 (ANI)
key policies announced in recent years.”
For businesses, particularly small and medium
enterprises (SMEs), reducing the complexity of tax the TDS rate structure could be divided into 3-4 seven months of FY25.
compliance is critical, EY India said in a statement broad categories with lower rates and a negative list. The report highlighted that India’s fiscal defi-
Wednesday. To achieve sustainable growth in 2025- Meanwhile, in their customary pre-budget cit for the April-November period of FY25 stood
26, India must prioritize reducing the fiscal deficit meeting with Union Finance Minister Nirmala at Rs 8.47 lakh crore, which is 52.5 per cent of the
to 4.5 per cent of GDP in 2025-26 while reducing Sitharaman on Monday, trade union leaders sug- budgeted estimate (BE). This marks an improve-
the debt-to-GDP ratio, which stands at 54.4 per gested a super-rich tax and an increase in corporate ment from Rs 9.07 lakh crore, or 50.7 per cent of
cent, well above the FRBM target of 40 per cent, tax to fund social security for informal workers. BE, during the same period last year.
said EY India. Talking to reporters after the meeting, Trade The deficit is significantly lower than the 114.8
To achieve a medium-term real GDP growth tar- Union Co-ordination Centre (TUCC) National per cent recorded in the pre-Covid era, reflecting
get of 6.5 per cent or higher, EY India said it can only General Secretary S P Tiwari said the government better fiscal management.
be achieved by increasing the government’s capital should impose an additional 2 per cent tax on the It said, “Fiscal impulse improves in Nov’24;
expenditure, improving capital efficiency and encour- super-rich to fund social security for informal work- further pickup likely in the rest of FY25. India’s
aging states to enhance their investment spending. ers. Tiwari also demanded that agriculture workers fiscal deficit for Apr-Nov FY25 came in at Rs8.47
To stimulate private sector investment, a progres- be extended social security and that their minimum lakh crore (52.5 per cent of BE).”
sive reduction in interest rates should be considered. wages should also be fixed. The report noted that after lagging behind the
Additionally, targeted employment schemes Trade Unions also pressed for increasing the historical trends until September 2024, fiscal dy-
should be fast-tracked to uplift urban demand and minimum Employees’ Provident Fund Organiza- namics improved from October 2024 onward, indi-
support economic momentum in 2025-26. tion (EPFO) pension to Rs 5,000 per month from cating stronger fiscal momentum. A positive shift
EY India also asks for deferring tax deduction Rs 1000 per month. In other demands, trade unions was observed in the quality of government expen-
at source (TDS) on PF interest rate (above 2.5 asked for an immediate constitution of the 8th Pay diture, with revenue spending being curtailed and
lakhs) until the withdrawal stage to reduce compli- Commission in the upcoming 2025-26 Budget. capital expenditure (capex) receiving a boost.
ance burden. Another report by the Union Bank of India This trend is expected to continue, with a sharp
In the previous budget TDS rate rationalization suggests that India is on the path of fiscal prudence increase in government spending likely in the re-
was undertaken to a certain extent. To further sim- as the government has spent around 52.5 per cent mainder of FY25 while maintaining a focus on
plify the entire gamut of withholding tax provisions, of the budget estimate (BE) of its deficit in the first quality spending.

www.TheIndianEYE.com