SBI Report Urges Fiscal Prudence and Tax Reforms Ahead of Budget

As the central government prepares its budget for July 23rd, an SBI report underscores the need for fiscal prudence, tax reforms, and a focus on agriculture and mineral strategies to bolster sustainable economic growth.

As the central government gears up for the budget on July 23rd, a State Bank of India (SBI) research report underscores the need for fiscal prudence and strategic economic planning. The report calls for a fiscal deficit target of around 4.9 per cent while balancing fiscal consolidation with measured flexibility.

The report suggests aligning personal income tax rates with corporate tax rates and transitioning all taxpayers to the New Tax Regime for tax relief. It also advocates for tax parity on bank deposits to stimulate household savings.

For the agriculture sector, the report highlights the importance of addressing financing, livelihood support, and the Agri Credit Guarantee Trust Fund. It critiqued the politicization of Minimum Support Price (MSP) policies and suggested exploring alternative mechanisms to boost export competitiveness.

Additionally, the report emphasizes the development of a comprehensive mineral strategy to ensure mass employment and a secure supply chain. Despite reforms in the banking sector over the past decade, it calls for continued reforms, including the divestment of public sector banks and changes to the Insolvency and Bankruptcy Code.

By incorporating these recommendations into the upcoming budget, the government can strengthen economic resilience, promote financial inclusion, and lay the groundwork for sustainable growth in the post-pandemic era, the report concluded.

(With inputs from agencies.)