Will Union Budget 2020 Give a Boost to Investments, Savings & Economy?

It is expected that Nirmala Sitharaman may announce stimulus measures for small businesses and non-banking finance companies in this Union Budget 2020

Will Union Budget 2020 Give a Boost to Investments, Savings & Economy?
Union Budget 2020-21
Will Union Budget 2020 Give a Boost to Investments, Savings & Economy?

Just before the presentation of the Budget 2020-21 by FM Nirmala Sitharaman, credit ratings agency Brickwork has mentioned, “The government is expected to continue amendments to several laws to give ease of doing business and announce appropriate measures to set a clear roadmap for achieving its ambitious $5-trillion target by 2025.”

It is likely that Nirmala Sitharaman may announce stimulus measures for small businesses and non-banking finance companies as a cut in corporate tax rates and rate cuts by the central bank have failed to revive growth.

Union Budget 2020: Brickwork Ratings

As per Brickwork Ratings, the upcoming Budget is an opportunity to unleash reforms. Also the measures brought in since August 2019 are expected to have an impact on the economy gradually.

The government announced a series of measures to grow up the economy such as:

In August- Upfront capital infusion of Rs 70,000 crore into state run banks and merger of 10 state-run banks into four.

September- There was reduction in corporate tax rate to 22% from 35%, and 15% for new manufacturers.

December- Rs 102 lakh-crore infrastructure project pipeline for next five years

According to the ratings agency, now Nirmala Sitharaman has to be very careful while making budget allocations to existing schemes as the task has become more challenging. It is expected by the analysts that the government may announce tax concessions in the Budget 2020 that will leave many individuals with more money in their pockets.

The Bengaluru-based ratings agency said, “Most PSBs are well capitalised and have capital adequacy ratios well above the regulatory requirement."  However, Brickwork said it does not expect any additional funding requirement from the government for PSU banks in 2020-21.”

The government may continue amendments to many laws to provide ease of doing business. More focus is on what the Budget 2020-21 offers to bring the economy on a growth track quickly to attain the $5 trillion economy goal by 2025.

On the contrary, many economists have lowered their growth estimates for the economy, which needs to grow at around 8% to create enough jobs for the millions of young people joining the labour force each year. Some analysts expect the current slowdown to continue for another year or two.