Monday, 28 March 2016

Union Budget 2016-2017

On 28th Feb in Mann Ki Baat programme, Prime Minister Narendra Modi had said that the next day 29th February is his examination day. It was not an easy exam because he had to fulfill the hopes and aspirations of millions of people who voted him to power.
There are so many issues.
Implementation of recommendations of 7th pay commission, declining food production in India, improving the growth rate in agriculture sector which is currently in the negative, providing infrastructure in manufacturing sector, implementation of ‘Make in India’, ‘Startup India’, initiatives taken by the Prime Minister, are some of the urgent problems which needed to be tackled while announcing the budget.
The farmer’s issues are not easy to handle. Indian farmers practice rainfed agriculture and producing food for millions and for themselves is by no means an easy job. The weather conditions are changing very rapidly. Only the allocation of resources are not sufficient. It has to be backed with a solid implementation programme.
Besides these, one rank one pension (OROP), increase in the allocation for health care, falling exports, increasing prices, providing jobs are some of the burning issues to be resolved by the Modi Government.
In the 25th year of economic reforms, the budget presentation was not a challenging job for the finance minister. Bangalore IT hub was the bane of Yashwant Sinha’s budget in 2000 but digital India now needs boost from another perspective including Smart Cities.
In this background, PM Modi has taken the exam.
The budget was  presented in the parliament by FM Mr. Arun Jaitley. This is the third budget presented by Arun Jaitley. Special packages were announced for the welfare of farmers and for the upliftment of rural sector like digital literacy, electrification of villages. Investment in the Infrastructure sector, Startups and Make in India programme, increase in the defence outlay and so on. Some new taxes have been levied on the middle Income Indians which are already over taxed.
There are mixed reactions to budget e.g.
  1. Fiscal deficit has been kept at 3.5% of GDP. GDP growth has been projected at 11 percent.The question is whether GDP growth will be achieved as predicted. Looking at the current global scenario and the exports, it looks unlikely that GDP growth of 11% will be achieved.
  2. An important feature of the budget is boost given to infrastructure sector with an outlay of Rs. 2,21,246 cr.
  3. Finance Minister Mr. Arun Jaitley has given prominence to agriculture sector and farmers welfare.
  4. Since Indian farming is majorly rainfed, the plan is to bring 28.5 lakh hectares under irrigation.

All these measures are very good but there is no mention of ways and methods to achieve them.
Taxing the super rich and allocation to farmers & rural sector is also seen as being done with political motive. Experts believe that it is done with an eye on vote bank in the light of coming elections in Assam, Tamil Nadu and West Bengal.
Taxing the overtaxed middle income group has been criticized by large population of India.

Not going into too many details, this budget has brought in mixed reaction and it is not possible to say whether Mr. Modi has passed in the examination or not. The exam result has been postponed and announcement of the result will be made only after looking at the implementation part of all these measures taken.

Dr. Avtar Singh Sethi
HOD (Mgmt.) 

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