current situation in India's economy

Topics: Tax, Economic growth, Inflation Pages: 7 (2593 words) Published: October 9, 2014
CURRENT ECONOMIC SITUATION OF INDIA
The state of world economy has been the most decisive factor affecting the fortunes of every developing country. The economic challenges faced by India are common to all emerging economies despite these challenges; India has successfully navigated through this period of crisis. The fiscal deficit for 2013-14 contained at 4.6 percent. The current state of the economy makes it necessary for the government to put in place a robust and implementable plan of action for its revival. The economy has experienced a consistent fall in the quarterly GDP growth since the beginning of 2013, alarmingly high levels of twin deficits viz. Current Account Deficit (CAD) and fiscal deficit as well as worrying volatility in the inflow of foreign investments. Though inflationary pressure has receded in the last quarter of 2013, it still remains above the target level of Reserve Bank of India (RBI). This along with other worrying economic indicators has put the Indian economy in a challenging pathway in the short term. Strengthening fundamentals and boosting growth inducing investments is the foremost consideration at this stage. In order to revive Indian economy and make it superpower economy certain reforms are really necessary in the fiscal budget for the year 2014-15. In light of structural constraints and below level growth performance, it is imperative to address the issues by taking certain necessary steps. Key Expectations in Fiscal budget 2014-15 from new government Reforms in Taxation – Taxation system in India need structural, operational and administrative reforms to foster growth. Goods and Service Tax (GST) should be implemented in order to boost the GDP. Under GST, the taxation burden will be divided equitably between manufacturing and services, through a lower tax rate by increasing the tax base and minimizing exemptions. It is expected to help build a transparent and corruption-free tax administration. GST will be is levied only at the destination point, and not at various points (from manufacturing to retail outlets). Reforms in Income tax: The exemption slab should increase from 200000 to atleast 300000. Also the exemption limit for certain allowances should increase like children education allowance is still Rs. 100 per month per child which should increase now considering how costly education in today’s era. Similarly medical treatment allowance is only Rs. 15000 P.a which is not at all sufficient in current scenario. Also, we know that India is having elite tax system. Indias population being 123 crore (18-60 years) out of which only 3.5 crore people are paying tax. So it is necessary for government to make sure that everyone is paying tax wisely. As it will benefit the entire economy. Apart from this indirect taxation also requires reforms. Special additional custom duty, reduction in CST rate are the necessary reforms required urgently. Foreign Trade – India’s export potential remains considerably unfulfilled because of infrastructure bottlenecks. While India moves fast to align its tariff structure with ASEAN, it lacked in initiating let alone completing domestic reforms and because of this local manufacturers are facing issues. So it is expected that a field for them should be provided. Industry – The industrial growth of India fell from 9.2 percent in 10th five year plan to 6.7 percent in current plan. Manufacturing grew only 2.8 percent during the last three years. So it is necessary that government should take certain steps to boost industrial growth. The sustainable development of MSME sector should be encouraged which will help in rejuvenating the economy.

Public expectation from the budget 2014
'Medical facilities in correctional homes need to improve'
Developing a mechanism in which volatility of global crude oil prices does not affect the common man. Hiking annual limit for medical reimbursement paid by a person for himself, spouse or dependent amounting to Raising...
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