Budget 2022: Announcements on personal income tax will be welcomed, says Neelkanth Mishra of Credit Suisse

 








Neelkanth Mishra of Credit Suisse shared his expectations from Union Budget 2022-23 which will be presented by Finance Minister Nirmala Sitharaman on Tuesday. In an exclusive conversation with ET Now, Mishra stated that policymakers in India (state and central level) are shifting again.


For most of the prior decade, it was fiscal consolidation. Currently, the markets are primed for higher deficits and are expecting the Centre and state to have high deficits. Also, the tax collections are also going up and the governments are unable to spend. Mishra highlighted that the biggest variable to track right now is the cash balance that the governments have with the Reserve Bank of India (RBI) and which is is more than 2 per cent of GDP right now. Mishra went on to say that the government's functioning was very badly impaired with the COVID-induced lockdown scenario in the country.

Talking about the Budget, the key variable to look out for in the Central and state Budget would be what they are looking to spend on and how much can they further scale up spending. Also, the tax revenues are pretty good and the temptation would be to consolidate aggressively. He also stressed that it is viable to grow normal GDP faster.

According to Mishra, if markets are primed for higher deficits, spending a lot more makes sense. At the same time, he stressed that one of the key takeaways from the last year's Budget was that it was very progressive as it showed paths on the government where it was focused on growth, privatisation of PSU Banks, and several other such steps. He mentioned that even if there are no concrete steps that affect the fiscal numbers and Budget speech talks about announcements on personal taxes or income taxes or removal of exemptions, he stated that all these things will be taken very positively. However, he stated that he is not sure if these things will be enough to offset the global market turbulence but he feels it will help India hold up better.




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