Budget 2024: A Triveni of fiscal discipline, focus on soft infrastructure and thoughtful consumption

economictimes.indiatimes.com:

First Triveni of fiscal discipline

In the fiscal landscape for FY 24-25, the estimated fiscal deficit stands at 4.9% of GDP, showing a reduction from the earlier target of 5.1% set during the interim budget. A pivotal factor contributing to this decline is the historic dividend of INR 2.11 lakh crores declared by the RBI. The government has reaffirmed its commitment to fiscal consolidation, aiming for a fiscal deficit below 4.5% by FY 25-26. Net borrowing has seen a marginal reduction to INR 11.6 lakh crore, down from INR 11.8 lakh crore in FY 2023-24. From FY 2026-27 onwards, the government will endeavour to maintain the fiscal deficit each year such that debt to GDP ratio is on a declining path.

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Relook at Reforms Time

There have been noteworthy reforms in income tax that could impact capital markets. The short-term capital gains tax on listed equity shares and mutual fund units has increased to 20% from 15%, while long-term capital gains tax has risen to 12.5% from 10%. The long-term capital gains tax on other assets has been reduced to 12.5% from 20%, albeit with the withdrawal of indexation benefit for all assets. In a move to attract foreign investment, the corporate tax rate for foreign companies has been reduced from 40% to 35%. Additionally, to support India's