SBI Report Suggests Key Changes for India’s Upcoming Budget

As the central government prepares for the upcoming budget on July 23rd, a research report by the State Bank of India (SBI) highlights crucial areas that need attention to drive sustainable economic growth and development in the country.

Fiscal Prudence and Tax Reforms

The report emphasizes adherence to fiscal prudence while continuing on the path of fiscal consolidation, suggesting a fiscal deficit target of around 4.9%. It advocates aligning personal income tax rates with corporate taxes and gradually transitioning all payers to the New Tax Regime. Additionally, it recommends considering tax parity for bank deposits to attract more savings and boost household financial savings.

Agriculture Sector

For the agriculture sector, the report highlights the need to address issues like financing, livelihood support, and the Agri Credit Guarantee Trust Fund. It suggests exploring alternatives to the current Minimum Support Price (MSP) policies, which reduce trade and export competitiveness.

Banking Sector Reforms

The report calls for continued reforms in the banking sector, including the divestment of public sector banks (PSBs) and the stake sale in IDBI Bank. It also recommends changes to the Insolvency and Bankruptcy Code and the promotion of Production Linked Incentive (PLI) schemes for MSMEs to reduce import dependency.

Mineral Strategy

The report suggests developing a comprehensive mineral strategy, especially for critical minerals, to ensure mass employment and secure the supply chain from exploration to recycling.

By incorporating these suggestions into the upcoming budget, the government can lay a strong foundation for sustainable growth, promote financial inclusion, and drive economic resilience in the post-pandemic era.