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Top 5 points to note about what is wrong with Arun Jaitley’s Budget 2016

Wed March 02 2016, 7:33 am
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    Arun Jaitley' Budget 2016: Global rating agency Standard & Poor's has said the roadmap for fiscal consolidation is tepid and there was no room for any positive action in the next two years. "As expected, fiscal consolidation will be gradual, challenging and vulnerable to adverse economic trends," Moody's said adding the Rs 25,000-crore allocated for bank recapitalisation is not as high as market estimated. Moody's also noted that none of the several measures announced in the Budget on the revenue and expenditure fronts, heralds a structural shift in the fiscal or macroeconomic framework. (AP)

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    1. Arun Jaitley' Budget 2016: S&P's grouse arises from the fact that the Finance Minister has stuck to the fiscal deficit target announced last year at 3.9 per cent for this fiscal and 3.5 per cent for the next, skipping an incremental roadmap. Moody's said "from a sovereign credit perspective, it wants to know whether the trend of falling annual fiscal deficits would be maintained in FY16 estimate and FY17 target?" (Reuters)

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    2. Arun Jaitley' Budget 2016: While Moody's and Fitch remained silent on the rating side, the largest of the three S&P was very vocal in saying the Budget does not make them change their rating outlook either this year or next. S&P said the proposal on the fiscal side shows only limited progress and ruled out any changes in rating outlook for next two years. It also posed queries on how the allocation of government resources towards civil servant pay hikes, and bank recapitalisation would affect FY17 budget targets apart from questioning whether new measures to address the structural challenges over the medium term would be introduced? (Reuters)

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    3. Arun Jaitley' Budget 2016: "The Budget has made limited progress in fiscal consolidation and it only modestly reduces the vulnerabilities associated with the low per capita income and weak public finances," S&P credit analyst Kyran Curry said in a note. (Reuters)

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    4. Arun Jaitley' Budget 2016: "Without marked improvements in the general government's fiscal outturns and accompanying declines in net debt, we do not expect to change our rating on India (BBB-/Stable) this year or the next," Curry added. "Government's debt burden and subsidy spending continue to significantly constrain its fiscal policy options," said Curry, adding "interest payments and subsidies account for almost 40 per cent of total budgetary expenditure." (Reuters)

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    Budget 2016: Arun Jaitley has something for too. For non residents, he said alternative documents to PAN Card will be allowed and TDS provisions for Income Tax will be rationalised, he said. A facility for revision of return will also be extended to Central Excise Assesses, he added. (Reuters)

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