Budget 2018: 10 things I expect from finance minister Arun Jaitley
It is “Budget time” and therefore there is much more than just a buzz in the air: the nation has indeed come to expect so much from the dynamic Union finance minister Arun Jaitley.
The ten broad areas we can reasonably expect to be addressed are:
1. Agriculture
With two-thirds of our population in this sector and with elections around the corner, there are two absolutely compelling reasons to expect incentives for agriculture.
These will take the form of productivity boosters and also provide some distress relief. They are well and truly good news for the nation as a whole.
2. Education
Half of our population is less than 25 years old; if we are to fully realise the demographic dividend there will be a huge push for the Skill India campaign. Formal education and vocational training apart, there will be a serious attempt to create an eco-system that engenders innovation and ideas.
3. Infrastructure
Roads, bridges, airports, seaports, special economic zones and smart cities definitely need and will get attention. We should also expect much greater focus on infrastructure in terms of irrigation, productivity enhancers and so on. There will be measures and mechanisms to ensure that the farmer receives fair market remuneration without intermediaries taking away a sizeable chunk.
4. Disinvestment
We can expect the Air India transformation to be completed in this year. We can hope that the government will move away from running hotels and loss-making PSUs.
BALCO is an example of a huge loss-making PSU that was partially privatised several years ago and, today, the government is being offered thousands of crores for the residuary minority interest. It’s a win-win and, therefore, expect this model to be followed aggressively.
5. Banking
Recapitalisation of banks will surely enable resumption of industrial lending. The Bankruptcy Act supports and abets banking operations. We are entitled to expect a structural change, that is reforms of PSU banks in the form of partial privatisation, thus ensuring that the bad loans saga is not repeated, once again.
6. Industrial investment
Incentives for manufacturing/heavy industry are an absolute must, lest we lose our fulcrum of growth. Expect tax breaks for new factories and fresh investments.
7. Job creation
If 1 to 6 actually happen, jobs will be a vigorous and veritable byproduct. However, it being the “election year”, we can expect populist employment schemes, which in itself are a necessary safety net. The devil, as usual, is in the implementation, that is these benefits should reach the needy.
8. PMAY/CLSS
PMAY-compliant projects are in such short supply that a vast majority of the population is unable to take advantage of this sterling initiative to put a roof over their heads.
We should expect incentives for creation of PMAY-compliant housing. Furthermore, a sizeable proportion of the entitled population is not fully aware of the scheme — in terms of what to do and how to proceed in order to avail the benefit. So, also expect accelerated and broad-based dissemination of information about the scheme.
9. Corporate taxes
Corporates with a turnover of less than Rs 50 crore currently shoulder a tax rate of 25 per cent. Expectations are for the limit to be revised from Rs 50 crore to Rs 500 crore. It is truly imperative if India wants to sharpen its competitive edge, especially in exports.
Even more relevant now that the corporate tax rate in the United States is a mere 21 per cent!
10. Personal taxes
The minimum wage in Delhi, for instance, is Rs 19,000 per month and rising; this approximately equates to the basic exemption of Rs 2.5 lakh. Makes sense? Well, the base exemption should be raised from Rs 2.5 lakh to Rs 6 lakh; realistically expect the limit to be raised by Rs 1 lakh to Rs 3.5 lakh. Furthermore, it is a practical requirement to increase tax exempt limit of medical expenses.
The mammoth and courageous GST rollout (lots of debates) is an undeniable success in the medium to long term.
Coupled with demonetisation, GST will (and has) encouraged the formal sector. Although short-term restrictive, RERA will also have a long-term beneficial effect on realty. Going into the 2018-19 fiscal year, we can expect buoyancy and a growth rate in the range of 7.5-8 per cent.
All in all, the India story is in good shape — the World Bank and the IMF agree. Achhe din are here, more or less!