Income-Tax Collection Growth
- Confidence in Growth
- The Government Targeted a 14.4% growth in income tax collection, outpacing the nominal GDP growth rate of 10.1%.
- Tax Buoyancy
- The government has projected a 12.5% growth in direct taxes, which will be led by efficient tax administration and voluntary compliance.
- Moderated Projections
- Growth has been moderated to 14.4% because it saw earlier surges of 19.7% in FY23, 25% in FY24, and is expected to be at 20% in FY25.
Effect of Tax Incentives on Inflation
- No Inflationary Worries
- The government does not worry about inflation by tax incentives; it argues that inflation is something related to scarce availability of goods and services, and these incentives will not change money supply dynamics.
- Stimulating Savings, Investment, and Consumption
- The tax proposals are likely to stimulate savings, investment, and consumption, which means a healthy economy without an increase in money supply.
Problems in Privatization of PSUs
- Gradual Disinvestment
- The plan of the government is to withdraw the whole stake by first listing PSUs and gradually lowering the stake of the government down to 51% through sales of the minority.
- Drawbacks
- The privatization process is hindered because buyers are not willing to accept companies with associated liabilities and assets of government enterprises, particularly when companies hold large tracts of land, such as Bharat Earth Movers in Bengaluru.
- This becomes a problem that allows for the separation of real estate and companies so that they become saleable to bidders.
- Slower Process
- The privatization process is also slower in the competition of other routes such as, NCLT or alternative funds.
Non-Tax Revenue and Oil Sector Concerns
- Confidence in Non-Tax Revenue
- The government is confident about meeting its non-tax revenue targets for the coming financial year.
- Profitability of Oil PSUs
- There are no major concerns about the profitability of oil PSUs despite the extant factors such as US policies. The oil prices are set to be stable and subdued, which would be a blessing for India.
