Finance Minister Arun Jaitley is set to present his fourth and perhaps the most challenging Budget that may look to soften blow of currency ban with tax and other sops as he seeks to revive growth.
After a brief moment of confusion over the postponement of the budget after the demise of MP E Ahamed, the business has been declared as usual. House is likely to observe two minutes of silence and start the crucial day of Budget.
Here are the live updates:
#Cabinet approves Union Budget 2017, to be presented shortly
#I offer my condolences; budget shouldn't be presented today: Lalu Prasad
#Budget will be presented today, will formally announce shortly: Lok Sabha Speaker Sumitra Mahajan
#There was no need to go to the President with the budget, what is the hurry?Shows mentality of Govt.Surprising: HD Deve Gowda
#Postponement of budget will be no big deal, its not as if secrecy will break-HD Deve Gowda,former PM
#Yes, it is the custom (House adjourned), but this government does not follow any customs: Naresh Agarwaal,SP
#Its neither possible nor is it correct: Subhash Kashyap ,Constitution Expert on postponement of budget after budget copies have reach Parl
#This was an inhuman act: Mallikarjun Kharge,Congress on allegations that E Ahamed 's death announcement was delayed
Watch me live presenting the Union Budget 2017 at 11 am, February 1, 2017 https://t.co/BtQAlBf8Zz— Arun Jaitley (@arunjaitley) February 1, 2017
#In our opinion, including JDU leaders and former PM Deve Gowda, the budget should be postponed: Mallikarjun Khadge, Congress
#Cabinet meeting to be held shortly in Parliament
#Arun Jaitley reaches Parliament
#Live | Budget 2017: FinMin Arun Jaitley gets President's approval; likely to present budget in Parliament at 11AM (9:50AM)
#FinMin Arun Jaitley at Rashtrapati Bhawan to seek President's approval (9:30AM)
#Finance Minister Arun Jaitley leaves for Rashtrapati Bhawan with Budget bag (9:10AM)
India Inc has said the Economic Survey has correctly assessed challenges facing the country today which is indicative of a bold and reformative Budget to be presented on Wednesday.
India's economic growth has been pegged at 6.5 per cent for the current fiscal, down from 7.6 per cent recorded in the last financial year, but is expected to rebound in the range of 6.75-7.5 per cent in 2017-18, according to the Economic Survey.
The Survey lists some of the challenges that might impede India's progress. These include ambivalence about property rights and the private sector, deficiencies in state capacity, especially in delivering essential services and inefficient redistribution.
Read | Budget 2017-18: FM Jaitley to present his 4th budget amid strong headwinds on Feb 1; tax sops, populist schemes likely to soften currency ban blow
While largely sticking to fiscal consolidation roadmap, Jaitley will present the Budget for 2017-18 amid strong headwinds caused by government decision to invalidate 86 per cent of the currency and the newly elected US President making protectionist noises.
Topping the list of sweeteners could be the hike in Income Tax exemption limit to Rs 3 lakh from current Rs 2.5 lakh as the Minister will look at putting more money in hands of people to not just create a feel good atmosphere but also check the disruptive impact of demonetisation on demand, supply chains and cratered credit growth.
Alternatively, he may raise the deduction limit for interest paid on home loans to Rs 2.5 lakh from Rs 2 lakh currently. A higher medical rebate may also be on the cards.
Besides tax break, there could even be a universal basic income in the Budget, industry officials and tax experts said.
But cutting 30 per cent corporate tax rate to lift sagging investments may not be easy given that government's official estimate of 7.1 per cent GDP growth for the current financial year does not take into account the chaos wrought by demonetisation.
While revenue collection targets for the current fiscal may exceed, there are doubts if Jaitley may project any substantial jump in tax receipts in 2017-18.
Also, the rising oil prices are a cause of worry for him, leaving him with very little fiscal room to manoeuvre social and infrastructure schemes.
Incentives or schemes for farmers and rural India, women and social sectors like health and education may be cornerstone of his budget given that five important states including Punjab and Uttar Pradesh will be voting within days of his Budget presentation.
Read | Finance Minister Arun Jaitley likely to hike service tax to 16-18% in Budget
Besides agriculture, the Finance Minister may also announce schemes for boosting domestic manufacturing and promoting start ups.
Tax experts and economists said Jaitley may hike the service tax (currently at 15 per cent) to align with the GST regime.
It will be keenly watched if he makes any changes to the tax regime on investments in equities. At present, gains from transactions in shares held for less than 12 months are considered short-term capital gains and are subject to 15 per cent tax.
Gains on holdings above 12 months qualify for long term capital gains benefits and are exempted from tax.
Read | Budget Glossary: All you need to know about key terms in Budget
Tax experts said ending tax breaks on equity gains may turn sentiments sour towards the capital market. There is a thought that the 1-year limit for long term could be changed to two years but the tax rate is likely to be kept at zero.
He will have to juggle numbers to remain largely within the fiscal consolidation roadmap. The current year's fiscal deficit target of 3.5 per cent of GDP is mostly likely to be met on back of surge in tax receipts from 7th Pay Commission grant to employees and tax amnesty schemes.
It remains to be seen if he will narrow the deficit, the widest in Asia, in 2017-18 to 3 per cent planned previously.
He may continue to piggyback on public spending, especially on infrastructure, as he looks to reverse the investment collapse.
A roadmap on Goods and Services Tax (GST), that will not just turn India into one market with one tax rate but also improve tax compliance and check evasion, may figure in Jaitley's Budget speech.