Finance Minister Arun Jaitley will present his third Budget on 29 February, 2016, amid growing concerns about the global slowdown, bank non-performing assets (NPAs), falling exports, reduced rural consumption, overcapacity the in manufacturing sector, falling domestic savings rate and stagnant private sector spending in infrastructure. While India needs increased spending in its social and physical infrastructure to achieve faster growth rate, the Central government's own finances will be constrained due to fiscal pressures from the 7th Pay Commission recommendations and fiscal deficit targets.
This year's Budget should introduce some changes in present tax exemptions and deductions to boost the domestic savings rate and encourage people to buy more long-term investment and insurance products. While the increased household savings rate and retail investment will help in boosting the financial well-being of individuals, increased investment by individuals will also help the government and private sector to finance their capital expenditure and cope with FII outflows.
