Work on fixing India's economy will go beyond Budget this week

INDIA'S budget for the fiscal year starting April 2020, to be presented by Finance Minister Nirmala Sitharaman on Saturday, will be keenly watched to see if it can pull the economy out of its current doldrums.

The International Monetary Fund recently cut its gross domestic product growth estimates for India to 4.8 per cent for the fiscal year ending in March 2020, and pegged growth in the coming financial year to 5.8 per cent. Ms Sitharaman's options are limited due to a major fall in tax collections as a result of sluggish growth. The government had planned for a 25 per cent increase in net tax collections for fiscal 2019-2020. But in the first eight months of the year, only 46 per cent of the tax target has been achieved, according to data from the Controller of Government Accounts. On top of that, the government cut corporate tax rates last September to boost investment.

The good news is that revenue from India's goods and services tax reached targets in November and December, and economists estimate that the collection could reach an all-time high in January. This could signal that the worst may be over for the Indian economy. The index of industrial production also showed a small positive gain of 1.8 per cent in November after three months in the red.