A Brief Reflection of Union Budget 2016-17

As I have discussed in previous article that from this year onward a new kind of budget is started. This budget is substantial budget due to three main reasons. First, Union government has represented its Budget 2017-18 at the beginning of February. The colonial era of tradition of presenting the Union Budget on the last working day of February has been departed.

Secondly, merging of Railway budget into General Budget is also a kind of new idea. This would definitely bring railway at the centre stage of the government fiscal policy. Thirdly, classification of plan and non-plan expenditure. This will give holistic picture of allocation of ministries and sectors. This would facilitate the optimum allocation of resources.

Thrust on rural economy & Infrastructure

This Union budget is somehow different from preceding one. It has provided a major thrust on rural economy and the infrastructure area. Increased target for agricultural credit allocation, irrigation and crop insurance are significant positives and would help in reducing volatility in rural income. Dragging policies into political blame game is no more myth. MGNREGA has been one of those which is stamped by Congress.

It seems like congress has monopoly over it. But this NDA government has increased allocation under MNREGA would strengthen social safety net in the rural economy. In line with expectations, the budget2017 didn’t provide any benefits on the indirect tax front to the automobile sector on account of implementation of GST in the near term.

The focus of the government on rural development and farmer welfare would be positive for tractors and the two-wheeler sector as entry level motorcycles have a sizeable dependence on rural segment. The entry level passenger vehicle segment also derives 30% of its demand from the rural market and would stand to gain. The increased construction of rural roads acts as a further demand-side positive for two-wheelers, especially gearless scooters, in the rural areas.

In addition to the budgetary allocations for the agricultural and rural sectors, the proposed income tax cut for the tax slab of Rs 2.5-5 lakh is also a positive by virtue of improving the disposable income of the middle income group augmenting demand for two wheelers. Although the ban on cash transactions above Rs 3 lakh would increase the financing requirement for higher-ticket premium bikes and luxury cars and may have a marginally negative impact on these segments.

The Commercial Vehicle sector will benefit from Government’s plans to significantly increase allocation towards infrastructure sector, especially development of roads & highways including those in rural areas. The benefits of higher disposable income owing to the roll-out of recommendations of seventh pay commission and OROP also supported demand for automobiles.

However, the growth momentum was interrupted during November and December, especially in the rural markets, due to demonetization of high-value currency notes which had pushed consumers to postpone their purchase decision, thereby applying temporary brakes on the growth momentum. The union budget proposals, with its focus on reviving the rural economy, can be expected to offset much of this.

Focus on agriculture and youth

In this budget agriculture has been focused with greater extent. It has been ensured that sowing farmers should feel secure against natural calamities. Government is going to provide support to the farmers. A sum of Rs. 10 lakh crore is allocated as credit to farmers, with sixty-day interest waiver which will definitely help farmers to develop their working procedures timely.

It was promised in budget session that NABARD fund will be increased to Rs. 40,000 crore.  Government is going to set up mini labs in Krishi Vigyan Kendras for soil testing. As I think it is unprecedented move by the central government because many it holds causes of many problems in agriculture sector. Due to lack of soil testing amount of urea increases in the field which affect the soil fertility adversely.

It was also promised to establish a dedicated micro irrigation plan. Fund will be set up for it by NABARD with Rs 5000 crore which is ample. Even irrigation cuprous increased from Rs 20000 crore to Rs 40000 crore which is a good reflection for farmers who are associated with agriculture deeply. Apart from agriculture dairy processing has been supported by the central government which will attract marginalised people and specially women.

In rural area, many women are connected with dairy farming and stand up with self-dependent. However, it will empower rural women also. Apart from that Issuance of soil cards is being provide which had gained huge momentum. It was also said that model law on contract farming will be prepared and shared with states. Overall farmer must happy with this new kind of budget.

If I talk about the youth of our country which is the potential of our country. Whole world is talking about the demographic dividend of our country. It was the big challenge before the government that they did not have related database so that required regulation can be establishes. In this budget, it was promised to introduce a system of measuring annual learning outcomes and come out with an innovation fund for secondary education.

As a youth, I was expecting to increase fund for research and development. But it was not much. I hope in next session they will take care about it. Anyway, for the major chunk of youth skill India mission was launched to maximize potential. It has been promised to open international courses on foreign languages. Central government has also promised to create 5000 PG seats per annum. 

Zoom to poor and common people

Budget has taken care of the poor and underprivileged health care. About Rs 500 crore was allocated for Mahila Shakti Kendras. Under as nationwide scheme for pregnant women, Rs 6000 will be transferred to each which is good step taken by the central government. Women health has been taken into consideration. A sum of Rs about 1.85 lakh crore has been allocated for women and children development.

It is necessary to take care the child at the time of birth otherwise serious problems may arise. It has also been promised to provide affordable housing to common people. One more important thing is that it has been promised to eradicate tuberculosis by 2025 by setting as a target. It was proposed to transformed sub health centre into heath wellness centre. Two more AIIMS will be set up in Jharkhand and Gujrat to provide better health facility.

It has been told during budget presentation that Aadhar bases smartcard will be issues to senior citizen to monitor their health, which is the good step taken by the government. Central government has promised many services to provide in railway for common people. No service charge will be taken on tickets booked through IRCTC which will endorse digital India campaign.

It has been targeted that unmanned level crossings will be eliminated by 2020. Expansion of railway lines is allotted more than previous year which will make common people to reach on time without delay. It has been promised that high speed internet is to be allocated to 1.5 lakh gram panchayats. It was promised to insert bio-toilets in all trains by 2019 which will be good thing as per health concern. SMS-based ”clean my coach service” is put in place to ensure the service to the common people.

Existing rate of tax for individuals between Rs. 2.5-Rs 5 lakh is reduced to 5% from 10%. It will relax the people from tax burden and make people to saving more. If people will have more saving then investment will be ensured more. All other categories of tax payers in subsequent brackets will get a benefit of Rs 12,500. Simple one page return is ensured for people with an annual income of Rs. 5 lakh other than business income.

It will make people to pay in an easy way without any kind of complications. People filing IT returns for the first time will not come under any government scrutiny. Overall I am in position to say that government has relaxed the norms and eradicated fear of taxation system. It seems that it is calling common people to them without any kind of fear and hesitations.

The central focus on Financial sectors

As I have mentioned in my previous article that it is a new era of Budget starts from 2017. I said because government central focus has been residing in Banking and financial sectors. More than 90% of FDI inflow are now automated. It has been discussed that shares of Railway PSE like IRCTC will be listed on stock exchanges. It will connect railway to the real market due tow which railways has been lagging for many years. I am very happy with this step.

It has been promised to present Bill on resolution of financial firms will be introduced in this session of Parliament. It has been told to connect financial system with computerized establishments. Pradhan Mantri Mudra Yojana lending target fixed at Rs 2.44 lakh crore for 2017-18 which will bring financial sector on central stage.

For the movement of Digital India BHIM app will unleash mobile phone revolution. The government will introduce two schemes to promote BHIM App, referral bonus for the users and cash back for the traders. DBT to LPG consumers, Chandigarh is kerosene-free, 84 government schemes are on the DBT platform. It will eradicate the middle people so that subsidy to the needy people can be flourished.

Secondly, money will be in rotational motion through banking. So, savings will be ensured without fail. Head post office as the central office for rendering passport service. Easy online booking system for Army and other defence personnel has been established. One more major changes have been done that plan, non-plan expenditure to be abolished and focus will be on capital expenditure, which will bring the fiscal program to the central stage.

Overall I can say that presented is good for all the section of people. Even they have talked about the funding of political parties. In which it was ensured that the maximum amount of cash donation for a political party will be Rs. 2,000 from any one source. Political parties will be entitled to receive donations by cheque or digital mode from donors. It will eradicate corruption in the political system and bring transparency in political funding. Secondly, it will bring faith and a good image in the public mind toward politicians and political parties.

One more step has been taken regarding political parties that an amendment is being proposed to the RBI Act to enable the issuance of electoral bonds. A donor can purchase these bonds from banks or post offices through cheque or digital transactions. They can be redeemed only by registered political parties. Likewise, in each and every sector budget has penetrated with great height. That is why I called it a new era of the budget is presented in 2017.