This year’s Union Budget stands out from the rest in a few ways. It was the first time since the British Raj that the Railway Budget was merged with the Union Budget. It was also the first time that the Budget did not mention any major hikes in indirect taxes or excise duties.
Overall, I can sum up the budget as a positive, inclusive roadmap for the coming fiscal year. One the one hand, it aims to improve the standard of living amongst India’s underprivileged communities. And on the other, it focuses on facilitating growth in core sectors such as housing and infrastructure that should attract greater investments in these areas, and thus create more employment.
The finance minister announced a thematic approach to the Budget, to achieve what he called ‘targeted delivery’ of benefits. Farmers, youth, rural communities and the underprivileged were among the themes. The Budget touched upon a variety of schemes—such as agri credit and agri insurance schemes to increase income security for farmers, a policy on contract farming, reforms to the University Grants Commission and other higher education oversight bodies, free online education platforms and skill development programmes for youth, health benefit schemes for women and children, and so on. One of the highlights here is the sharp increase in the MNREGA budget to increase spends on rural employment. Many of the Budget’s initiatives have been targeted at elevating 1 crore households above the poverty line by 2019.
Another clear thread is the government’s push for the digital economy; the FM announced more incentives for cashless initiatives such as the BHIM app, the UPI, Aadhaar-linked payment cards, and so on. He also announced a cap on all cash transactions above R3 lakh.
There are a few initiatives that will be hailed by many: affordable housing has been classified as infrastructure. This will enable housing projects to get the benefit of several funding schemes and make affordable housing available to a much wider populace. In a welcome move, the FM has supported those earning less than R5 lakh per annum by cutting income tax rates by half. Indian Railway passengers will benefit from cleaner, safer coaches. The FM hopes to achieve 100% electrification of rural villages by 2018. And high speed internet will be made available to 1,50,000 gram panchayats soon.
There are positives for industry as well. Government spends on infrastructure will be up by 25% next year. This will translate into better road connectivity, better service delivery from the railways and modernised airports in Tier-2 cities. Schemes to boost rural electrification and net connectivity in gram panchayats were also announced.
The FM has focused on ease of doing business. The Foreign Investment Promotion Board is being phased out, and the government has announced reforms to the FDI policy. Just as important, there were no significant tax or excise hikes in the budget, and the GST roll-out is on track. In a nod to the backbone of India’s economy, the vast MSME sector, the FM cut income tax rates for companies with a turnover of less than R50 crore.
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An important point to note is that the FM has also kept to the path of fiscal discipline. The fiscal deficit has been pegged at 3.2% and will be even lower next year. On the whole, transparency and efficiency seemed to be the underlying message of the Budget. A welcome move towards ensuring that India’s economy remains on an upward trajectory, as it takes its place on the global stage as the world’s sixth largest economy.
By Kumar Mangalam Birla, Chairman, Aditya Birla Group