Budget 2018 will be more keenly watched than last few non-event Budgets

Budget 2018-19 is one that the markets are looking forward to eagerly – more eagerly than the past few years when the Union Budgets were referred to by many as a non-event. This is mainly because it cannot be ignored that this will be the last full Budget before the next general elections in 2019, and eight state elections are coming up in the medium term. Markets would, therefore, closely watch announcements around taxation, rural economy, social sector and infrastructure spending.

After the rollout of the goods and services tax (GST) in July last year, the possible indirect tax change in the Budget might happen in the form of customs duty tweaks, given that GST Council meetings decide on the bigger tax structure. In earlier Budgets a road map for bringing corporation tax down was hinted at. Corporate entities would be watching for some headway on this when Finance Minister Arun Jaitley presents the Union Budget 2018-19 on February 1. The world’s largest economies have taken steps toward this end. But having said that, each economy has its own unique aspects and such action could not be simply replicated. Any reduction in corporation tax, if implemented, still remains something that could have a far-reaching impact on earnings.