Budget 2017 - How it will shape India's economy - Comment
Every government faces the challenge of striking the right balance of populism and fiscal prudence, without compromising with the financial principles. This is especially important in the context of the post demonetized Indian economy and the new challenges and ripples that it has created in the Indian financial sector.
Evidently, the 2017 budget provides a strong base to sculpt the Indian economy in the near future. In his speech, the FM quoted the Agenda for 2017-18 as: 'Transform, Energize and Clean India' - TEC India, which implicates:
- to transform the quality of governance and quality of life of the Indian people.
- to energize various sections of the Indian society and to enable them to unleash their true potential.
- clean the country from the evils of corruption, black money and non-transparent political funding.
Moreover, the FM announced a surcharge of 10% for tax payers whose income is between 50 lakhs and one crore and 15% surcharge for tax payers having income more than one crore. This is likely to make the income tax system more progressive and bring in additional revenue of around 2700 crores. The income tax slab for people having income between 2.5-5 lakhs has been cut to 5%, thereby enabling around 20 million middle class Indians to have more disposable income. This is especially important in the context of the recently demonetized Indian economy which has adversely impacted consumption to a considerable extend.
It is believed that consumer driven products and services will be benefitted by tax relaxation and this will increase employment by at least 5-10% in these sectors. Moreover, the FM announced that the GOI will launch a 4000 crore scheme called Sankalp (acronym for Skill Acquisition and Knowledge Awareness for Livelihood Promotion Programme) to provide market relevant skill development training to 3.5 crore Indian youths. He also announced an increase in the number of Pradhan Mantri Kaushal Kendras from 60 to over 600 and the establishment of 100 India International Skill Centres (IISc) which would enable the skilled youths to look for job opportunities overseas. The dearth of certified skilled labour is one of the main reasons behind India's jobless growth and the mentioned initiatives taken by the GOI is definitely likely to bring positive results and provide a concrete shape to the aspirations of the growing Indian economy.
In order to control and curtail the amount of anonymous cash donations to the political parties, the FM announced a reduction in the limit from Rs20000 to Rs2000, to usher in transparency and clarity in political funding and this is a giant leap in the shaping up of the Indian economy and the true spirit of democracy.
Based on the recommendations of SIT on black money, the FM announced that the GOI has decided to ban all cash transactions above Rs 3 lakhs from April 1, 2017 and violators would be subjected to 100% penalty. This is a way forward in setting an upper limit to cash transactions and boosting the prospects of Digital India, wherein lies the future of India.
The agricultural sector is expected to grow at 4.6% and the total allocation for the rural, agricultural and allied sectors for 2017-18 is Rs 1.87 lakh crore, which is 24% higher than the last year. Moreover, the allocation under MNERGA has been increased to 48000 crore from 38500 crore and this is the highest ever allocation made to MNERGA.
The 2017 budget also brings in some good news for the startups. The FM announced an increase in the period of profit-linked deductions available to the startups to 7 years from the current 5 years. However, tax breaks is only on profits made by the startups for three years.
The 2017 budget also witnessed the merger of the Railway budget with the Union budget. The FM allocated Rs 3.96 lakh crore for infrastructural development in 2017-18; Rs 1.3 lakh crore for railways - the highest ever rail budget. The FM also increased the overall budget for education sector to Rs 79685.95 crore for 2017-18, with greater emphasis on science education and promotion of creativity and hence, evidently, GOI is committed to the aim of a 'Literate India' and the dream of a vibrant Indian economy.
The FM reassured that the pace of remonetisation has picked up and given the commendable initiatives taken up by the GOI in the 2017 budget, it will lead to some long term benefits including higher GDP growth, wider tax base, upliftment of the poor and the underprivileged and finally a firm foothold of the Indian Economy in the global context.
- Nitisha Bora