Hai naya daur
Nayi hai Umang
Kuch der pehle ke tareeke
Kuch aaj ke rang dhang
Roshni aake takrayi hai
Ki kale dhan ko badalna pada rang”
– Arun Jaitley
The 2017-18 Budget was one of the most anticipated budgets for several reasons. To begin with, an historic decision was taken by the central government to demonetise high valued currency notes to curb the circulation of black money from the system.
It was the only decision in history that impacted each and every citizen of country. The second and foremost reason is the merging of the rail budget into the finance budget, which was done after almost a century.
The day before the release of the budget, in the release of economic survey, Mr. Subramanian cleverly dodged giving any comments on the success of the demonetisation scheme and chose to simply mentioning the statistics of the survey that indicated that government would be on the backfoot in parliament as far as the demonetisation is concerned and not indulge in their typical act of chest thumping.
The budget session began with a little bit of rumbling by the opposition leader suggesting that the budget day be moved to a day later given the death of MP E Ahmed but Sumitra Mahajan maintained that the budget be presented on the designated day, as even President Mukherjee urged for the budget session to proceed.
The budget was divided into following sections
- Agriculture and rural area
- Youth and education
- Railways and transport
- Finance and Tax
This was the exciting part and it started with several announcement for the benefits of distressed farmers.
- Allocation under MNREGA increased to 48,000 crore from Rs 38,500 crore. This is highest ever allocation.
- Rs 9,000 cr higher allocation for payment of sugarcane arrears
- Target of agriculture credit fixed at Rs 10 lakh cr in 2017-18
- Agricultural sector is expected to grow at 4.1 per cent this fiscal
- Mini labs by qualified local entrepreneurs to be set up for soil testing in all 648 Krishi Vigyan Kendra
- Govt to set up dairy processing fund of Rs 8,000 crore over three years with initial corpus of Rs 2,000 crores
- 1 cr households to be brought out of poverty under Antodya Scheme
- Dedicated micro-irrigation fund to be created with a corpus of Rs 5000 crore
- 100 % electrification of villages to be completed by May 2018
- To construct one crore houses by 2019 for homeless. PM Awas Yojana allocation raised from Rs 15,000
- 500 crore to anganwadi centre to empower rural women and literacy
Total allocation – Rs 1,81,223 crore
Opinion- This budget turned out to be quite beneficial for the rural and agriculture sector, this year. The sugarcane industry of UP was already suffering from a high debt and had been asking the central government for support for several years now; the announcements of an arrear will definitely prove to be of great benefits for the agro industry in UP.
A target of 10 lakh crores, which has been allocated for providing loans to farmer can be considered as a good step, but it majorly depends whether the banking sector would be willing to give them loans in the first place.
We all know very well how agriculture is treated differently from other sectors where loans are concerned; we will have to, now, wait for comments from public banks to get a better understanding of this issue.
- Reforms in UGC and higher autonomy to Institutions
- Two new AIIMS to be set up Jharkhand and Gujarat
- Science subject to be given priority in schools
- 5000 seats increase for PG in medical colleges
- 2200 crore in industrial training
- Pradhan mantra Kaushal Kendra Yojna in 600 districts to provide advanced training in foreign language.
Opinion- Not much for the urban youth as there were expectations on announcement of new NITs or IITs.
- Rail safety fund with corpus of Rs 100,000 crore will be created over a period of five years.
- Railways will integrate end to end transport solutions for selected commodities through public – private partnership.
- All coaches of Indian Railways will be fitted with bio-toilets. Unmanned crossings will be eliminated by 2018. 3,500 railway lines will be commissioned.
- New Railway line of 3500 km commissioned
- Joint venture to make 500 stations specially abled friendly
- Service charges on railway e-tickets will be withdrawn.
- A new metro rail policy to create employment
- Budget increase for highways from Rs 57,676 crore to Rs 64,000 crore
- Select airports in tier-II cities will be taken in PPP mode
Total Allocation– 2.41 lakh crore
Opinion- The rail budget was not too disappointing as it was already expected that the merger of the two budgets would definitely undermine the rail budget.
No service charge on online train bookings will definitely provide a little relief to travellers.
- Easy FDI regime
- Rs 10,000 crore to be provided for re-capitalisation of banks.
- SIDBI to refinance credit companies for disbursement of small loans.
- Introduction of new rules for confiscating domestic assets of those flee the country to avoid enforcement of law.
- Startups to pay tax on profits for three out of seven years, increased from three out of five years.
- Income tax for small companies with an annual turnover of 50 crore, now to pay 25% tax, a 5% reduction
- Rs 7,200 crore revenue will be foregone on account of tax rebate to MSME.
- Pradhan Mantri Mudra Yojna allocated from 1,22,000 crores(last year) to 2,44,000 crores ( this year)
- Amendments in negotiable instruments act for dishonoured cheques
- Head post office in city to be used as window to get passport
- Defence expenditure of 2,75,214 crores and 37,000 crores for scientific industries
- Limit of Rs 2000 on cash donations to charities and political parties
- Election bond to be announced in which person can buy election bond of specific party and the political party can encash those bonds
- Allocation of Rs 10,000 cr for Bharat Net project for providing high-speed broadband in FY18
- Computer emergency response team to be set for cyber security of financial sector
- Excise duty on non-filter cigarettes of length not exceeding 65 mm raised
- Solar tempered glass used for manufacture of solar cells/panels exempted from customs duty
Opinion- This could possibly be considered as the best part of budget as it would definitely give some soul to the market by reducing tax rates for medium and small enterprise industries, which were severely hit by demonetisation.
The finance ministry worked here in great detail and has kept something for every industry in market. The government’s focus on digital India can be seen here as they have focused on the spreading of optic fiber cables to villages by connecting panchayats and setting up response teams to tackle any cyber security matter.
Start-ups have also been provided with some benefits by changing the tax on profits period.
Change in political funding can be considered as one of the aces that Mr. Jaitley kept under wraps to challenge corruption in the political landscape of India.
- Capital gains tax to be exempted, for persons holding land from which land was pooled for creation of state capital of Telangana
- Listing of railways companies to stock exchange
- Increase in advanced personal tax deposit by 34.8%
- No transaction above Rs 3 lakh to be permitted in cash
- New Tax slab
10L and above- 30%
- No tax for income till 3 Lacs
0-2.5 Lacs – Nil
2.5L-3L- 50,000 @5%= Rs. 2,500
Rebate under section 87A = Rs. 2500
Tax to be paid = NIL
- Surcharge of 10% on assesses earning between 50L- 1 crore
Opinion- Reducing the income tax rate from 10% to 5% will benefit a lot of poor and lower middle class people and will encourage increased spending within the economy.
It was expected as well that the government won’t announce more tax benefits for savings under section 80C as the market post demonetisation was low and extra savings would obviously not help in reviving the economy to full bloom.
Most affected here would be the rich, working class, who will be paying an extra 10% surcharge on incomes earned and we can expect reduced spending in electronics and luxury business.
Mr. Jaitley raised concerns over tax collections in India in a sarcastic way by comparing figures of foreign travels and car sales to the no. of tax payers which clearly tells us that government alone cannot make India a tax compliant country.
Our expectations sometimes do not match up to the reality, and such was the case with this year’s budget. The government didn’t announce more projects under the pilot category of smart cities which was needed for tier 2 cities; maybe, the government is serious about fulfilling its old promises and making new ones.
Nothing substantial was announced to bring about changes in the education and health sector, and sadly these two sectors are overlooked every time.
The railway budget was not as optimistic as it used to be, but it is expected that more schemes and trains will be announced post elections as the EC has strictly advised not to announce any schemes for states in which election is about to take place.
The banking sector has a lot worse debts and recapitalization can rescue these banks temporarily; but for the long term, announcements of a bill which makes it difficult for absconders to run away, making sure that there won’t be a next Vijay Mallya.
This budget will not change much for the country in terms of positive progress, however, it will keep the country running for a while. In the words of noted economist John Keynes, “In the long run we are all dead”