
"The government has sought to reclassify imported solar panels and modules in a category that attracts 7.5 per cent duty and various kinds of cess whereby the cost of a solar cell, around 30 cents at present, will go up to around 50 cents for Indian developers if 70 per cent safeguard duty is imposed".
A prudent budget could also soothe the Reserve Bank of India, which holds a policy review on February 6-7 amid worries it could raise rates in coming months after inflation hit a 17-month high in December, well above its 4 percent target.
But a recent spike in inflation, tightening cash conditions, and worries about fiscal slippage have sent the 10-year bond yield up more than 80 basis points since July, the biggest move since the 2013 rupee crisis.
Although India has evolved from having tax rates for individuals of nearly 98% in the 1970s to a three-slab structure with the highest being at 30%, the corporate tax rate remains to be rationalised.
He has to manoeuvre all this within limited scope of tinkering with tax rates given that central excise duty, which was levied on goods manufactured in the country, and service tax have both been subsumed in the GST and he no longer has the sole power to fix rates on them.
Another factor which can weigh on revenue is the rise in oil prices.
Some incentives to boost exports in certain sectors may be announced while there may be announcements for start-ups as well as for promoting entrepreneurship.
Markets remain nervous after the government's annual economic survey on Monday suggested "a pause" in fiscal consolidation, sending bonds plummeting. Or will he signal a move to fiscal deficit range from fixed target. The shortfall was largely due to reduced dividends from government companies, which the government looks to bridge through stake sale in state-owned firms like HPCL. The Budget presentation will commence at 11 am. He also merged the Railway Budget, usually presented two days before, along with the general one, ending a 92-year-old practice.
Last year, The Narendra Modi government has ended the colonial era tradition to present the Budget on the last working day of the second month of the year, i.e, February.
Economists say that Budget 2018 should announce policies to kick-start the investment cycle, which will help put economic recovery on a firmer footing.
The Budget for 2018-19 will be the first Budget after the implementation of the GST regime.
The PM said Make in India programme will foster economic growth as it aims at utilising the existing Indian talent base, creating additional employment opportunities and empowering secondary and tertiary sector. For the current fiscal year, the fiscal target is 3.2 per cent and the government is unlikely to meet that goal.
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