The government has begun working on the blueprint for its first full-fledged Union Budget early next year, which includes steps for curbing black money and encouraging voluntary disclosure, a definite time frame for the roll out of the Goods and Services Tax (GST), measures to trim the fiscal deficit and incentives for the MSME and manufacturing sector that would help boost growth.
“There has been some discourse on what should be included in the Budget and reviving growth and curbing deficit are key priorities. Another top focus area is likely to be the issue of black money and how it can be curbed, but it is too early right now,” said a person familiar with the development, adding that the Budget may also include some announcement on voluntary disclosure of unaccounted income.
The finance ministry has already begun initial work on the annual financial exercise with discussions on the revised estimates for 2014-15 and the Budget estimates for 2015-16 but a final shape on policy announcements would be made closer to the Budget presentation in February next year.
But finance ministry officials are hopeful that the model and timeline of the GST would be worked out by then and a formal announcement on its roll out can be included in the next Budget.
“It is on top of the agenda and we are hopeful of a consensus on the GST by then,” said an official.
However, the other tax reform — the proposed Direct Taxes Code — is unlikely to be taken up at present by the government. “It is on the back burner right now. Even when the BJP was in the Opposition, it was not in favour of the proposed Code. So it will have to be reviewed again,” said the first source.
The Union Budget 2015-16 is, however, expected to continue with the thrust on fiscal consolidation by focussing on trimming of subsidies as well as higher efficiency in government expenditure.
The first report of the Expenditure Management Commission is also expected by then and will provide key inputs for curbing the deficit.
The report of the Fourteenth Finance Commission will also be another key input for the Budget on not only devolution of taxes between the Centre and the states but also on fiscal consolidation. The commission, led by former RBI governor YV Reddy, is expected to submit its report by December.
Meanwhile, continuing with its focus on reviving economic growth, the Budget is also likely to include more measures for manufacturing, in particular micro, small and medium enterprises. “The basic idea is to carry on with the measures that have been started by the NDA government in this sector to boost manufacturing growth that in turn would revive the economy and create jobs,” said the person.
Prime Minister Narendra Modi had in September this year unveiled the ‘Make in India’ campaign aimed at making India a global manufacturing hub. Since then, the government has also announced new initiatives on labour to attract more companies.