By Surabhi Gupta
New Delhi: Expectations run high across sectors ahead of the Union Budget, to be presented by Union Finance Minister Nirmala Sitharaman on February 1.
The economists have made recommendations to the Centre focusing on tax reforms pertaining to salaried people, support for MSMEs, improvement of the education sector, and research and development in science and technology.
Relief for salaried tax-payers
Economists have called for wide-ranging reforms in personal income tax, especially the new tax regime. Dr. S.P. Sharma, Chief Economist at PHDCCI, emphasised the need for rationalising taxes for the middle class. "Peak tax rates on incomes above ₹15 lakh should be reduced to 25%, and the threshold for peak rates should be raised to incomes above ₹40 lakh," he said.
Support for MSMEs: Backbone of the Economy
MSMEs, contributing around 30% to India’s GDP, are pivotal for economic growth. Economists have urged the government to prioritise this sector by offering funding support, integrating MSMEs into global value chains, and providing tax incentives. "MSMEs in developed economies contribute over 60% to GDP. This trajectory must be achieved in India with active government support," Sharma said.
Education: Bridging the Gap
The education sector, catering to a population of 145 crore, remains a critical focus. Economist Sharad Kohli highlighted the need for equitable access to quality education across economic strata. "The gap between elite private schools and underfunded government schools must be bridged. Allocations should ensure that children from all backgrounds receive the same quality of education," he asserted. Kohli also called for improved teacher training, rationalised pay scales, and incentives to attract talent to the teaching profession, which remains underappreciated.
Science and Technology: A Leap Toward Innovation
India has demonstrated huge advancement in science and technology with its active contribution, especially through ISRO, thereby coming forth as a global leader in space research. Economists expect more allocations in the budget towards developing artificial intelligence, blockchain, and other upcoming technologies. "India has the potential to lead the next technological revolution. Investments in AI, Internet of Things (IoT), and blockchain can enhance efficiency across industries," Kohli remarked. He also emphasised the need for government-backed initiatives to support startups and innovators in these fields.
"ISRO, a symbol of India’s scientific prowess, is likely to receive additional funds to support its ambitious missions, including advancements in satellite technology and manned space exploration. India's achievements in space are remarkable, and continued investments will strengthen our global standing," Sharma added.
Infrastructure and Capital Expenditure
A significant boost to capital expenditure (capex) is anticipated, with economists urging a 20-25% increase to enhance infrastructure. "State-of-the-art infrastructure is crucial for India's journey towards becoming a developed economy," Sharma said.
Sector-Specific Expectations
Aviation: The aviation sector looks forward to rationalised ticket pricing and reduced operational costs. Kohli suggested including aviation turbine fuel under GST, which is a long-standing demand. "Affordable air travel must be a reality, aligning with the government's vision of taking India from 'Hawai chappal to Hawai jahaj'," he said.
Petroleum: Economists have called for rationalising petroleum product prices by bringing them under GST. This could curb inflation and reduce dependence on fossil fuel imports. However, a parallel focus on renewable energy and climate-friendly policies is expected to balance this initiative.
Startups: India's burgeoning startup ecosystem, already the third-largest globally, requires continued support. Sharma emphasised rationalising taxes and offering incentives to help startups scale and compete internationally. "Startups are the backbone of India's innovation ecosystem. With the right support, India can aim to become the second-largest startup hub by 2030," he said.
Artificial Intelligence and Digital Transformation
Economists suggest larger allocations for AI and blockchain R&D to retain India's status as the leader in digital transformation. However, they warned against excessive dependence on AI that could take away jobs in a labour-intensive economy.
Telecom and Connectivity
India’s telecom sector has made rapid strides, and the government's push for indigenous 6G technology development is a major focus. Kohli stressed the need for more operators in the market to foster competition and lower costs for consumers. "Affordable data and communication have been key drivers of India’s growth, and policies must ensure this continues," he said.
