Union Budget will be a blockbuster in time to come
The annual Union Budget has simply too many goals, hence it may not appear all glittery right away, especially to money watchers from the middle class. Also, all that glitter may not be gold after all.
This year's Budget is seen as a revival Budget for domestic investment that is threatening to turn turtle, by economic expert Rajiv Kumar. It has ramped up public capital expenditure by a whopping 25 per cent - expecting "crowding in" of private investment is his opinion as well.
The corporate tax cut from 30 per cent to 25 per cent, though applicable only to SMEs, is being considered a big hope in the above direction. MAT not being abolished yet is perhaps no good news for investors.
An urgent need for employment creation is sensed. The MGNREGA getting an allocation of Rs 48,000 crore, PM Gram Sadak scheme getting Rs19,000 crore and PM Awas Yojna being provided with Rs 23,00 crore - together nearly Rs 1,00,000 crore for rural programmes - must be taken as definite signs of job creation for the rural population.
Besides, there are other special schemes for creating employment in leather, textiles and certain other labour-intensive sectors, as well as setting up of over 100 skill development centres to launch skill acquisition and knowledge awareness in foreign languages for the youth. All this is expected to fetch fresh domestic and foreign job opportunities.
The next in line are the big-threes: to transform, energise and clean the economy by curbing flows of black money, cutting out the space for a parallel economy and powering growth. The follow-up efforts to enact laws to weed out black money, corruption and ring in clean and good governance, are borne out in the lead step taken by this government to regulate political funding.
Agriculture and rural development have taken the front seat in this Budget's proposals. Farm credit has been fixed at a record level of Rs 10 lakh crore for 2017-18, soil health labs, long term irrigation fund at Rs 40,000 crore, dairy infra fund at Rs 8,000 crore, and micro irrigation at Rs 5,000 crore are a stack of agricultural reforms coupled with one crore housing units in two years.
To make villages poverty free by 2019 to coincide with the 150th birth centenary of Mahatma Gandhi is a big historical step taken in this Budget.
 |
| The RBI needs to address the imbalance in monetary policy. (Photo: Reuters) |
The assigning of infrastructure status to rural housing and related farm funding will make available a substantial portion of the infra spend, budgeted at Rs 3.9 lakh crore, and thereby benefit rural development. This is described as an approach with traditional values and modern vision.
Finance minister Arun Jaitley’s cash-back schemes for merchants, Aadhaar payments and creation of a payment regulatory board at the Reserve Bank of India (RBI) are positive measures to promote a digital economy.
Tax administration to be toned to make direct tax collection commensurate with the expenditure pattern of the economy is a welcome move. No big personal income tax benefits have been given to the salaried class.
A mere 5 per cent reduction of tax rate in the income bracket of Rs 2.5-5 lakh and a steep rise thereafter to 20 per cent in the income bracket of Rs 5-10 lakh is bad taxmetrics.
The "firsts" of the Budget on February 1 - doing away with the spurious distinction between Plan and Non-Plan expenditure and the rolling over the colonial railway budget into the general Budget - have already been much talked about and therefore the less said about it the better.
Given the fiscal stance of the Budget, the RBI needs to address the imbalance in monetary policy to sync with the expansionary fiscal policy of the government. A higher headline fiscal deficit at 3.2 per cent of GDP though a tad high is opined fine by economic experts.
Also, increasing incipient pressures on banks have not been addressed with adequate infusion of fresh capital. Allowing raising of fresh equity with demonetisation inflows might be a good idea to take care of the dampness of the economy.
No big tax changes have been made on the indirect tax front in the wake of the Goods and Services Tax (GST), except to the extent of incentivising the digitising efforts in the form of tax breaks for digital machines and their parts imported as well as produced domestically.
Demonetisation and GST are described as tectonic changes. The Budget ends on a high note - that the government, hoping for the winds to change favourably in its direction, will return with plenty for the people by the year 2019.
Let us hope for the best.