Under pressure from a resurgent Congress which is going all out to lure voters with the promise of debt waiver for farmers and a minimum income for the poor if voted to power, Goyal may announce some form of a direct transfer of cash to farmers. This may or may not replace subsidies that the farmer gets but will certainly be aimed at addressing rural distress, which was primarily blamed for BJP’s defeat in recent assembly elections in key states.
Goyal, who stepped in as interim finance minister after Arun Jaitley had to fly to New York for medical treatment, is widely expected to raise income tax exemption thresholds. Basic exemption limit may be raised from Rs 2.5 lakh to Rs 3 lakh for individuals of less than 60 years of age and from Rs 3 lakh to Rs 3.5 lakh for those aged 60 years or more but less than 80. Women taxpayers may get higher basic exemption of Rs 3.25 lakh or even at par with senior citizens, as per sources. An alternative to raising the exemption limit is to raise the 80C deduction to Rs 2 lakh from Rs 1.5 lakh to encourage taxpayers to save more for their future.
The measures, industry and informed sources say, could include those to create employment as the government faces a tag of giving a jobless high GDP growth. For investors, these sops may translate into another breach in the budget deficit target of 3.3 per cent of GDP for the current fiscal and a possible record borrowing in the coming financial year.
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