The Union Budget 2017 in a nutshell
Amidst a lot of cynicism, and doubts involved about the halting economic progress since the Prime Minister slashed 86% of the Indian currency in one go, finance minister, Arun Jaitley presented the Union budget 2017. Based on extensive research and investigation, the 2017 Union budget was one which tackled the most bothering issues of the Indian economy, along with taking a huge step to marginalize corruption – with development and progress not left behind.
The demonetisation scheme which the Indian government refashioned in the ‘blietzkrieg’ model as India’s war against black money, had plunged civil life and economy into a state of disarray, and chaos. Even though, the situation has somewhat normalised since November, the impacts of the drastic measure is still felt everywhere in the Indian markets. The economic progress has halted down to 6.8%, and trade and commerce had suffered a drastic setback.
Bearing in mind, the recent developments in the country, this year’s budget was expected to have been formed after extensive research, as the central government was previously quoted saying that the demonetisation scheme was equally vital in the investigation of the tangible assets of the Indian diaspora. The total expenditure of budget 2017-18 has been placed at Rs.2.74 lakh crores.
Here’s a gist of the Union budget 2017 in a nutshell :-
Increased tax for the rich, lowered tax for the poor :-
A bit surprising for a party which emphasises on privatisation, and capitalism as the backbone of economic progress though, but surprisingly, the right-wing led Indian government has modelled a perfect socialist outlook in its schemes for the current Union budget.
This basically means, that for the fiscal year 2016-17, the taxation rate for people having an annual income of 2.5-5lakhs will be brought down to 5% from the previously charged 10%. While an additional 10% surcharge will be mounted on individuals earning more than 50 lakhs rupees a year.
Considering the fact that the richest 1% of Indians own about 53% of the national wealth, this new taxation policy will be doubly effective, and justified.
Transparency for political party fundings :-
A raging issue that has been plaguing Indian politics is the amount of black money hoarded into political lobbies to win appeasement, and a safe haven. The Parliament took a historic decision in this year’s union budget by curbing the illicit cash dumping into party treasuries by issuing an order that would limit the amount of donations in cash to political parties to Rupees 2000 only, by a single donor.
One can only donate more money to political lobbies through digital payment, or cheques, which directly comes under cash regulatory supervision. So basically, gone are the days of Sharada, and Sahara (on paper), and unless economic offenders and political parties find another way to launder their illicit cash, it’s going to be a bumpy road ahead.
Another important feature which was announced today, was that the political parties are subjected to file for income tax returns from the year 2017 onwards. A daring movie indeed to provide a transparent information medium for the regular Indian tax payer to find out where his tax money goes to!
A shift to a digital economy :-
One of the many reasons which the central government cited for the demonetisation scheme was the immediate transition of the Indian economy from a cash based one to a digital based model. The implementation might not have been as good as it sounded on paper, but as it seems like, the Modi government is prepared to execute this task rapidly.
No cash transactions above 3 lakhs has been the new order of the year, with an aim to hit black market dealings in real estate, and precious metal sector. The pre-dominance of cash in the Indian economy also makes it markedly impossible to track income holdings.
The government is also considering to review government receipts beyond a certain threshold through e-modes. Even service charges have been wavered off for booking railway tickets through IRCTC.
Boost to infrastructure spending :-
A fiscal deficit target of 3.2% of the GDP for projects was announced in the Union budget for the year 2017-18. Additionally, a capital spending of about 25.4% was announced in today’s session.
3.96 trillion rupees for infrastructure development from last year’s 2.8 trillion, and 2.41 trillion for transport sector marks a considerable rise in the boost to state expenditure.
Major focus on improving the Indian railways :-
A total of about 1.31 crores have been allocated to the railway sector, with 3500kms of railway lines commissioned already. A target to install bio-toilets in every train by 2019 was also announced.
The Indian railways was looking for a much-needed push to improve its current statistics. Many experts have gone on to say that this budget might just be a revolutionary change for the Indian railways as we know it.
Development for the underprivileged :-
An increase in budget allocation for SC’s by 35%. It transcended from Rs 38,833 crores to Rs 52,393 crores. A sum of Rs. 500 crore for Mahila Shakhti Kendra, and a sum of Rs. 1,864,632 crores have been allocated for women and children.
Focus on science, medical facilities and education :-
This year’s budget has seen a considerable interest in improving science, and education in this country. While complete abolition of tuberculosis was targetted by the year 2025, the central government also announced the plan to build two AIIMS in Jharkhand, and Gujarat.
Expenditure for science and technology was set for Rs 37,435 crores, and a special emphasis to improve the 3000+ educationally backward blocks was announced.
Rural development :-
The MGNREGA budget stood at a record 48,000 crores. The MGNREGA, or the Mahatma Gandhi National Rural Employment Guarantee Act which is a labour law, and a social security measure which aims to improve livelihood, and decrease unemployment in the rural sectors was first introduced by the erstwhile UPA government.
It aims to provide atleast 100 days of guaranteed wage employment to every rural household below the BPL limit, to increase economic security to low-income families. It is also aimed at improving productive assets in the nation’s economy such as roads, canals, or farms. The government aims to bring 1 crore Indian households out of poverty by 2019.
The finance minister said that the MGNREGA this year was aimed to improve farm productivity and assets to increase agricultural development. The initial UPA led administration failed to induce much state capital out of this scheme.
As a result, a lot of scepticism is involved in this budget allocation. However it would be interesting to see how the central government fares this time.
Increase in the agricultural sector :-
The Indian economy heavily relies on its agricultural productivity. As much as 15-20% of agricultural assets contribute to the state’s GDP. Keeping this in mind, the NABARD fund has seen an increase to a sum of 40,000 crores, in the form of state expenditure.
Irrigation corpus has clocked a massive growth to Rs 40000 crores from Rs 20000 crores last year, and a sum of about Rs. 10 lakh crores have been allocated as credits to farmers for the fiscal year 2017-18. The finance minister announced that he aimed to record a 4.1% growth with better monsoon this year from the farming sector.
Income tax investigation results post demonetisation :-
The most shocking revelation in the budget session was Arun Jaitley’s data mining regarding the tax based revenue structure of this nation. India heavily suffers from a very poor tax to GDP ratio pattern. While the average ratio in major emerging market economies stand at 21%, India’s percentage stands at a paltry 16% as compared to its arch rival China’s 28%.
Emphasising on this issue, Arun Jaitley shared with the nation some statistics of the economic structure in this country. He said that while only 76 lakh Indians claim to have an annual income above the figure of 5 lakhs a year, 55 lakhs of these citizens are salaried employees. Only 1.72 lakh people declared an income of above Rs.50 lakhs a year. About 1.95 crore Indians claim to have an income between Rs.2.5-5lakhs per year.
However, in the last five years, over 1.25 crore cars ranging from Rs. 3.5lakhs to several crores have been sold in this nation, and more than 2 crore Indians have travelled abroad for business, and tourism purposes. Even more startling is the fact, that about 1.10 crore bank accounts have had deposits exceeding the amount of rupees 2 lakhs post demonetisation – a survey completed extensively by the appointed investigative team during the cash transition.
Arun Jaitley further went on to state how important the decision to ban 500 and 1000 rupee notes have been for the nation, as a record 34.8% increase in personal income disclosure have been disclosed. He claimed that the most significant step in India’s fiscal year 2016-17 was bound to make the economy and the GDP cleaner, and the progress growth smoother.
While most economists, and trade analysts have welcomed this year’s union budget, one wonders how much of it will actually bear fruit. The share market, BSE SENSEX and NIFTY recorded a tremendous growth at about 27,656.70 and 8548.85 post the budget sessions, throwing a positive light on the Indian economy, which suffered heavily after concerns regarding H1B visas in the service sector.
Whether the market statistics is expected to rise favourably or descend is a matter that we will see through the next fiscal year. For now, the Union Budget 2017 has been given a thumbs up from most entities.
Things that will get cheaper :-
Solar tempered glass.
Vegetable tanning extracts which are used for tanning leather products.
Fuel Cell based power generator systems.
Things that will get more expensive :-
Tobacco and tobacco products (cigarettes, beedis, cheerots, pan masala)