union budget 2016-17
TRANSCRIPT
Union Budget 2016-2017
The Finance Minister summed up his third budgetwiththreeli6lewordsthatreflectbig:Desire,Dream& Vision; his desire to provide socio-economicsecurity to every Indian, his dream for a prosperousnaDonandhisvisiontotransformIndia.MrJaitleyhasdescribedhis threeprioriDesas strengthening India'sfirewalls by ensuring macroeconomic stability andprudent fiscal management; driving growth throughdomesDc demand; and economic reforms and policyiniDaDvestochangelivesforthebe6er.
This Budget has an overarching focus on improvingagriculture,andscalinginfrastructure,withmeasuredfocus on social sector reforms and recapitalisingIndia'sbankingsystem;allofwhichbodewellforthecountry.
But rising rural distress aKer back-to-back droughtsand a recent heavy elecDon defeat in a largelyagricultural state have upset the math from thepreviousbudgetcalculaDons,especiallygiventhefactthat four out of every 10 people rely directly onfarming for their livelihoods. Thus, Agriculture hastopped the FM’s list of prioriDes – while Rs 35,984crore has been allocated for agriculture in the nextfiscal, the outlay under the MGNREGA programmewas being enhanced to Rs 38,500 crore in a bid tothink beyond food security and move to incomesecurity.
InfrastructuregotahugepushwithanallocaDonofRs2.19 lakh crore for road and rail sector. There’s alsogreat news for rural electrificaDon -- 100% ruralelectrificaDonisexpectedbyMay1,2018.
ConDnuing government efforts to dealwith the highlevels of NPAs or bad debts, of state-run banks, theBudgethasallocatedRs25,000croreforrecapitalisingpublic sectorbanks.ThemarketswereexpecDngthisamounttobehigher.
Several incenDveshavebeenprovided for thehealthsector.TheFMislookingatmakingqualitymedicinesavailableataffordablepricesbyopening3000genericdrugs stores to reinvigorate supply in 2016-17. The‘NaDonalDialysisServicesProgramme’–aPPPunderthe NaDonal Health Mission -- will not only benefitpeoplewith renal problemsbutwill also provide taxincenDvestoprivateplayersinthehealthsector.
A new health protecDon schemewill provide healthcover up to INR 1 lakh per BPL family. For seniorciDzensanaddiDonaltop-uppackageupto30,000willbeprovided.
As promised, start-ups have been given a three-yeartax holiday and capital gains exempDon, and theGovernment will introduce a bill to amend theCompaniesAct,2013inthecurrentBudgetSessionoftheParliament thatwouldalso improve theenablingenvironmentforstart-ups.
Because innovaDon provides thrust to economicgrowth,theFMhasproposedaspecialpatentregimewith 10% rate of tax on income from worldwideexploitaDon of patents developed and registered inIndia. IncenDves will be also provided to promoteentrepreneurshipamongSC/STs.
What comes as a surprise factor was the parDaltaxaDon of EPF and PPF. This will reduce pensionmoney significantly when it is withdraw onreDrement.UnDlnowtherewasnotaxoninvestment,oninterestaccruedandonwithdrawalonEPF.
The third budget ofMr. Jaitley is rightly focussed onrural development. Given the global turbulence andthe fact that demand has unDl now been createdwithin the country, abudget focusingon ruralneedswillfurtherspureconomicacDvityandgrowth.Butastrading came to a close today, the Sensex finallyse6led at 23,002 points, down 152 points from thepreviousday’scloseaKerfluctuaDngthroughtheday.
We now have to wait and watch how industry andmarkets react to this Budget as it pans out in thecomingfiscal.WelivewithhopethatthisBudgetwillpromptgrowthanddevelopmentastheFMpracDcesfiscaldiscipline.
MedhaGirotraPublicAffairsPracDceLead
PILLARSFORREFORMINGINDIA
Whatareyourini;alreac;onstoFinanceMinisterArunJaitely’s2016-2017Budgetspeech?MyfirstreacDonisthatitisquiteapredictablebudget.Itwasexpectedthatthegovernmentwillgiveareemphasisoninfrastructure,whichithasdone.Thereissomeuncertaintyaboutwhetheritwouldreduceorbridgethetargetonthefiscaldeficit.Thefinanceministermaintainedthattarget,howeverhehasalsoannouncedthatheisgoingtosetupareviewmechanismorcommi6eetolookintothewholeFiscalResponsibilityandBudgetManagement(FRBM)systembecauseinmanywaysitisquitelong.
Whatareyourthoughtsontheannouncementsintheagriculturesector?Itiscertainlyforwardlookingbudgetinthissector.Usually,inthebudgetthegovernmentalwaysemphasisesonwhatlooksgood.Inthatsense,thereisasignificantthrustontheagriculturesector.Withsomuchtalkaboutthetreatmentoffarmersandfarmerdistress,Ithinkit’sagoodathingtogiveemphasiseonthesector.However,Iwouldn’tholdmybreathabouthowmuchofthisispossibleinoneyear.Inmyviewoneofthebestthingstobeannouncedisthecropinsuranceschemeforfarmers.
BasedonwhattheHon’bleFinanceMinisterspokeonthefloorofthehouse,howdoyouseetheimplica;onsfromimplementa;onof7thpaycommissionandOROPplayout?AsfarasOROPisconcerned,Ithinkthegovernmenthasalreadyadoptedthatandsetouttheplan.Onthe7thpaycommissiontheFinanceMinisterhasdeclaredthathehasmadeaninterimprovisionsothatitwilltakecareoftheburdenofthisfinancialyear.However,bothOROPandthe7thpaycommissionhasmanyimplicaDonsbeyondthecomingfinancialyear.Italsodependsonwhenthe7thpaycommissionrecommendaDonsbegin
togetimplemented.SoIthinkwearecoveredforthisyear,buttheimplicaDonsfurtherdownthelineareyettobeworkedout.Therehavebeenaslewofmeasureswhichhavebeenannounced,whichincludetaxsopsforsmallbusinesses,theincreaseofthecapfrom1croreto2crore.
DoyouthinkthisisanentrepreneurfriendlyBudget,andinwhatway?Yes,Ithinktheincreasefrom1croreto2crore,provisionsforscheduledcastesandtribetobecomeentrepreneurs,areallposiDvesteps.Itisclearlyanentrepreneurfriendlybudget.Howitwilltranslateintoresultsongroundisyettobeseem.Itisimportanttorememberthatthebudgetisjustanannouncement,itneedstobetranslatedintoactualacDon.WhatisinitforCorporateIndia?VeryoKentherearesmallthingsthatneedtobedonethatdonotleadtobignewsbutcanbequiteimportant.Forinstance,anITplapormormakingprocessestransparent.ThereareseveralsuchsmallthingsthathavebeenannouncedthoughthereisnobigDcketannouncementonthecorporatetaxesside.Iwouldagreethattherehasnotbeengreatexcitementonthesideofthecorporates,asfarasthetaxsopsareconcerned.ButtheimportantthingfromtheirperspecDve,istheseqngupofanAssetReconstrucDonCorporaDonforwhichtheyhavesetasidethemoneytorecapitalisethebank,orcleanuptheirbalancesheets.That’sverysignificant.Doyouthinkthestepsannouncedfortherecalibra;onofbankingsector?Publicsectorbankshavedonealotofimprudentlending,withpeoplewhodon’tpaybackthemoneythattheyhaveborrowed.Thisiswhatputsthebanksandthebalancesheetunderthepressure.UnDlthisgetscleanedupinthebalancesheets,thebankscannotdofreshlending.
WhattheFinanceMinisterhasannouncedisthatthosewhoareholdingallthesenon-performingloans,theywillbehandedofftoaseparateAssetsReconstrucDonCompanyorwhatisoKencalledabadbank,becauseittakesonallthebadassets.Itwillensurethatthebalancesheetsgetcleanedup,andthebankscanrestarttheirlendingoperaDons.WhereastheAssetReconstrucDonCompanywilltryseparatelytorecoversomeofthoseloans,withoutinanywayimpairingthefuncDoningofthebank.IwouldsaythisisoneoftheveryimportantmoveswhichtheFinanceMinisterhasmadetoday.OneofthepillarstheFinanceMinisterfocusedonwasEduca;on,SkillingIndiaandJobcrea;on.Doyouseethisposi;velycontribu;ngtoIndia’sgrowth?IthinkthisisanothergoodmoveinthatdirecDon,someoftheseitemsaregoodinthemselves.ButtheimportantquesDonisthescaling.AreyoupuqngenoughmoneybehindtheseschemesorisitjustatokenallocaDon?MyconcernwiththeskillingIndiaprogrammeisitisagoodthingtodo,butareyoudoingitonasufficientenoughscaletoreallymakeadifferencetotheemploymentmarketforproducDveskilledlabour.Thereisfoodforthoughthere.Ifwecomparethisbudgettolastyear,doyouthinkthegovernmenthasprogressed?Thegovernmenthasdefinitelytriedtomakeprogressalongthelinesthathadbeenindicatedlastyear.Themainfeaturesaretopushinfrastructureinvestment,tryandmaintainfiscalprudencewithoutraisingthedeficittoomuch,alsoonthetaxproposalsidewherethegovernmentsaidtheywillreducecorporatetaxalongwithreducDonofexempDons,sothosethingshavelargelybeendone.
11:04AMBeginningofbudgetspeech
BSESENSEX 23,127.5712:44PM Endof
budgetspeechBSESENSEX 22,966.34
SudiptoMundleEmeritusProfessor,
NaDonalInsDtuteofPublicFinanceAndPolicy
AnautonomousresearchinsDtuteunderMinistryofFinance
ECONOMISTVIEW
Government’s
focuswillbeon
ensuringmacro-economicstabilityandboosDng
domesDcdemandbesidesconDnuing
thepaceofeconomicreforms.Ithasalsovowedtoprovideprudentfiscal
management.Onabroadlevel,the
focusoninfrastructureseemsright,as
itwillcertainlyhelpconnectthecountry
be6erthereby
providingbe6eropportuniDesto
expandanddeepen
thedomesDcmarket.
GiventhecondiDonof
internaDonalmarkets
itwouldbewisetofocusandbuildthe
largeopportunitythat
isavailableinIndia.
Thefocusonagricultureandthe
openingupofforeigndirectinvestment(FDI)throughtheFIPBroutefor
markeDngfoodproductsproducedand
marketedinIndiacanalsoboostthe
agriculturalsector.InteresDngly,thegovernmentdidnotwaitDllthefourth
yearofcomingtopowertofocusonissuesthatnormallyseebenefitscloser
totheelecDonyear.Eightschemes
havebeenintroducedfortheagriculturesector-thePradhanMantriKrishiSinchaiYojana,ParmparagatKrishiVikasYojana,OrganicValueChainDevelopmentinNorthEastRegion,
UnifiedAgriculturalMarkeDng
ePlaporm,PashudhanSanjivini,NakulSwasthyaPatra,E-PashudhanHaatandNaDonalGenomicCentreFor
Indigenousbreeds.Theseshouldgiveagoodboostto
theruraleconomy.
TheFinanceMinisteralso
focusedontheissueof
governanceandeaseof
doingbusinessandimportantlyconsDtuteda
TaskForceforraDonalizaDon
ofhumanresourcesinvariousministries.OntheMakeinIndiafront
theBudgethastriedtomakea
contribuDontochangecustomsandexcisedutytoimprovecompeDDveness
insectorsrangingfrominformaDonand
technologyhardwaretocapitalgoods,
defenceproducDon,texDles,chemicalsandpetrochemicalstoaircraKandship
repair.TaxeshavealsobeensimplifiedandraDonalizedtomakeiteasyfor
doingbusinessinIndia.
Thefrailtyoftaxregimethatthe
corporatesectorhasbeenpoinDngto
alsoreceivedmenDonwiththefinanceministercommiqngtoastableand
predictabletaxaDonregime.Companies
willnowhopethattheMinisterandhis
officialswillremaincommi6edtothiscause.Overall,itisaBudgetthatis
morefocusedonmacroissuesrather
thanonspecificsectors.Thisshouldprovidetherightkindofenvironment
forbuildingstrongconnecDvityand
boosDngproducDvitybothatthefarmandindustrylevel.Thisalsoinaway
addressesthecriDcismthattheBJPis
interestedincorporatewelfareover
farmwelfare.
TheNaDonalDemocraDcAlliance
governmentseemstobelookingtousetheBudgettoboostgrowthbygiving
theruralandinvestmentsectorsabig
push.However,themostimportanttaskforthegovernmentwillbeto
maintainfiscalprudencewhen
spendingforgrowth.
The “Transform India” Union Budget presented by
Finance Minister, Mr. Arun Jaitley, in Parliament today seems balanced at first look and hopefully will have no
devil in the details.
TSVishwanathSeniorPolicyAdvisor,
EdelmanIndia
Non-TaxRevenueINR1,81,561
crore
RevenueReceiptsINR8,03,808
crore
CapitalReceiptsINR5,10,189
crore
Withapro-smallbusiness,pro-agriculturebudget,theimpactofthisBudgetwillcertainlynotbevisiblequickly.ThewayIseeit,thisbudgetisabouttryingtomakealongtermimpact.Iftheapproachworks,thentheimprovementsmaybemorebroad-basedandhaveabiggerimpactonthejobsfrontandhenceboostdemand.
TheGovernment’scommitmenttosLcktothe3.5%fiscaldeficitisgoodbutitsrelianceonsomewhatuncertainrevenuesourcessuggeststhattheactualfiguresmaywellbedifferentfromthebudgetesLmates.Alsointhelongrun,aSemptstowardsbringingmoreflexibilitytotheFRBMmaycreateitsownissues.ThereabrightspotsuchasiniLaLvesonbroadeningofagriculturalprocurementanddevelopingSC/STentrepreneurs’hubs.AlsowelcomeistheannouncementofstepstowardsdevelopingguidelinesforPPPresoluLonsuchasthePublicULlity(ResoluLonofDisputes)BillandguidelinesforrenegoLaLonofPPPConcessionAgreements.Someofthetaxreformsandfinancialsectorchangesmayhavesalutaryeffectsaswell.SomeofthefinancialsectorchangeslikebroadeningtheSecuriLesAppellateTribunal(SAT)andempoweringAssetReconstrucLonCompanies(ARCs)maypromotebusinessinthelongrun.However,thesestepsareunlikelytogetmuchacLongoingonthe“MakeinIndia”frontatleastintheimmediaterun.TheotherthingwhichisquiteinteresLng,Idon’tknowifit’sposiLveornegaLve,istaxcollecLonresearch.
Dr.RajeshChakrabar;ExecuDveVicePresident
ResearchandPolicy
WadhwaniFoundaDon
POLICYEXPERTS’VIEWS
Infrastructure
Socialsector,education,health
Roads,inclPMGSY
Ruralsector
Ruralemployment (MGNREGS)
AgricultureandFarmers’welfare
RecapitalisationofPublicSectorBanks
PradhanMantriGramSadakYojana(PMGSY)
PrimeMinisterFasalBimaYojana
Skilldevelopment
2,21,246
1,51,581
97,000
87,765
38,500
35,984
25,000
19,000
5,500
1,804
Majorallocations forFY17(INRcrore)
PlanExpenditure +
NonPlanExpenditure = TOTAL
INR3,45,978Cr INR9,68,019Cr INR13,13,997Cr
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