A report by the SBI called for more reforms in the banking sector in India. File
| Photo Credit: Reuterss
As the Central government prepares for the Union Budget presentation on July 23, a research report by the State Bank of India (SBI) has highlighted crucial areas that need attention to drive sustainable economic growth and development in the country.
The report emphasises adherence to fiscal prudence while continuing on the path of fiscal consolidation, suggesting a fiscal deficit target of around 4.9%. “Government should focus on adherence to fiscal prudence and continue on the fiscal consolidation path, but at the same time refrain from obsessing too much over the fiscal stance,” the report stated.
To provide relief in tax structures, the report advocates aligning personal income tax rates with corporate taxes and gradually transitioning all payers to the New Tax Regime.
Additionally, it recommended considering tax parity for bank deposits to attract more savings and boost household financial savings.
For the agriculture sector, it highlighted the need to address issues like financing, livelihood support and the Agri Credit Guarantee Trust Fund.
The report also noted that the Minimum Support Price (MSP) has become politicised and suggested exploring alternatives as the current MSP policy reduces trade and export competitiveness. “The issues innate to MSP mechanism viz. needless politics, disincentivising private investment, neglect of non-MSP crops, reduction in export competitiveness and burden of trade disputes alternative mechanism needs to be looked into vigorously, viz. obligation to private parties for buying crops at MSP,” it said.
The report also suggested developing a comprehensive mineral strategy, especially for critical minerals, to ensure mass employment and secure the supply chain from exploration to recycling.
It called for more reforms in the banking sector in India, including the divestment of public sector banks (PSBs) and the stake sale in IDBI Bank. “After a decade of transformative changes, the Indian banking system stands much healthier ready to scale up to meet emerging challenges as the country embarks on the Viksit Bharat sojourn” it said. It also recommended changes to the Insolvency and Bankruptcy Code and the promotion of Production Linked Incentive (PLI) schemes for MSMEs to reduce import dependency.
The report also noted that by incorporating these suggestions into the upcoming Budget, the Government can lay a strong foundation for sustainable growth, promote financial inclusion, and drive economic resilience in the post-pandemic era.
