If the experts of economic matters are to be believed, the government can free the income up to five lakh rupees to increase demand and consumption in the upcoming budget.
Finance Minister Nirmala Sitharaman can give health insurance like the Pradhan Mantri Jan Arogya Yojana with income tax exemption to the middle class in the budget presented this week. If the experts of economic matters are to be believed, the government can free the income up to five lakh rupees to increase demand and consumption in the upcoming budget. Along with this, the scope of Pradhan Mantri Jan Arogya Yojana can also be extended so that better benefits of health facilities can be provided to more and more people.
According to economists, there is a need to increase the maximum demand and consumption in the economy at this time. Economic activity will accelerate only due to increased demand. For this, along with increasing capital expenditure, it is important to have more money in the common man’s pocket. The government is working on several infrastructure schemes on the capital expenditure front. Along with this, income tax relief should be given to the general working people so that they have more money to spend in their pocket.
Measures to create employment and increase capital expenditure
Dr. Pramod Kumar, a professor at the Bangalore-based Institute for Social and Economic Change, says that to overcome the sluggishness in the economy, the government needs to increase reforms as well as take measures for employment generation and increase capital expenditure. This will bring more money in people’s pockets and demand will increase. He said, “The middle class, especially jobbers, are definitely expecting a cut in income tax. At present, the reason for the current softening in the economy is a decrease in demand, not supply. In such a situation, tax relief can be given to the middle class by increasing the basic personal income tax exemption limit from the existing Rs 2.50 lakh to Rs 5 lakh.
At present, 5 percent from 2.50 to 5 lakh rupees, 20 percent for 5 to 10 lakh rupees and income above Rs 10 lakh is taxed at the rate of 30 percent. Apart from this, a rebate of Rs 12,500 has been given to those with an income up to Rs 5 lakh, that is, there will be no tax on income up to Rs 5 lakh.
Need to reduce tax burden on salaried class
Anil Sood, a professor and economist at the Hyderabad-based Institute of Advanced Studies in Complex Choices (IASCC), also said, “The direct tax burden on salaries should be reduced. Increasing expenditure in health and transport sector is impacting savings, so the finance minister should provide relief in personal income tax to increase the savings rate and demand. However, in the last budget, the Finance Minister had given huge relief to the taxpayers, completely exempted them from income tax if they had a taxable income of up to five lakh rupees but did not make any change in the income tax slab. This time, experts believe that the income tax slab can be changed and income up to five lakh rupees can be exempted from tax.
Kumar has also said that under Section 80C of the Income Tax Act, there is a need to increase the limit of Rs 1.5 lakh on life insurance premium, tuition fees and other savings to Rs 2.5 lakh. This will save more money in the pocket of the salaried class and demand will increase in the economy. Finance Minister Nirmala Sitharaman will present the general budget of 2020-21 on February 1. Bringing the sluggish economy back on the fast track will be a big challenge. In the second quarter ended September, the economic growth rate came down to 4.5 percent. The full year growth rate is estimated to be 5 percent, which will be the lowest in the last 11 years.
Benefits of health insurance to middle class also
In the budget, the middle class can also get the benefit of health insurance on the lines of Pradhan Mantri Jan Arogya Yojana (Ayushman Bharat). At present, about 10.74 crore poor families in the country get health insurance of Rs 5 lakh for treatment of critical illness in government and private hospitals. Brijesh Upadhyay, general secretary of the trade union Bhartiya Mazdoor Sangh, said, “We have been demanding pension and health insurance facility for everyone for a long time.” The government is running a health insurance scheme for the poor. In this budget, the benefit of this scheme can also be given to the middle class.