On February 1st, Union Finance Minister Arun Jaitley presented the Union Budget for 2017 in the Parliament. After the demonetisation drive that was started by the government early November last year, this budget was eagerly awaited, not just by the economists and the industrialists but by the common man alike. The country had its expectations set high as this was first joint budget of Railways and Finance ministry. Everyone was keen to see the steps the government would be talking now to hold true to their promises of promoting self- employment, reduction in taxes and various other schemes. Did the budget manage to live upto these expectations? We will let you decide.
The budget for 2017-18 announced tax sops for the middle class and small companies while increasing the tax liability of the super-rich. Jaitley proposed to reduce the tax rate for individuals in the income tax slab of Rs 2.5 lakh to Rs 5 lakh from 10% to 5%, giving some relief to the middle class. He also proposed a simple tax return form for this category of taxpayers. The finance minister sought to reduce tax rates for small and medium-sized companies as a part of an earlier promise to gradually reduce corporate tax rates and phase out exemptions given to companies. Jaitley also proposed to bring in a law to confiscate properties of economic offenders who have fled the country.
Various schemes like seamless banking, BHIM app updates ([Bharat Interface for Money], an initiative taken by PM Narendra Modi towards developing a cashless India) have been included. The government will introduce two schemes to promote BHIM App- referral bonus for the users and cash back for the traders. Adhaar Pay (a mobile application that allows payments to be made with an Adhaar card via the bank accounts linked to it by using thumb impression) was announced to promote safer and faster banking. Jaitley proposed “Swayam”, an online education platform, or Massive Open Online Course (MOOC) that would help people to build skills and gain employment. Through this, more than 350 courses will be telecasted via free DTH. Special focus is given on cyber security, pptical fibre rollout, and digital villages under which high-speed internet is to be allocated to 1, 50,000-gram panchayats.
For agricultural sector, funds are increased so as to make agriculture a profitable sector of the economy and simultaneously making the farmers financially strong. A sum of Rs. 10 lakh crore is allocated as credit to farmers, with 60 days interest waiver. NABARD(National Bank for Agriculture and Rural Development) fund will be increased to Rs. 40,000 crore. Irrigation corpus increased from Rs 20,000 crore to Rs 40,000 crore. Dairy processing infrastructure fund will be initially created with a corpus of Rs. 2000 crore. A model law on contract farming will be prepared and shared with the States.
For the underprivileged, the government targets to bring 1 crore households out of poverty by 2019. Over Rs 3 lakh crore will be spent for rural India. MGNREGA (Act offering to guarantee hundred days of wage-employment in a year to a rural household) to double farmers’ income. Rs. 19,000 crore will be allocated for Pradhan Mantri Gram Sadak Yojana in 2017-18. With these changes,the country seems well on way to achieve 100% rural electrification by March 2018. The government proposes to complete 1 crore houses for those without homes. Aadhaar-based smartcards will be issued to senior citizens to monitor health.
The total allocation for Railways is Rs. 1,31,000 crore. No service charge would be applied on tickets booked through IRCTC. Railways will offer competitive ticket booking facility. Five-hundred stations will be made differently-abled friendly.
Steps to make tax administration more efficient have been proposed. The Income Tax Act is to be amended to ensure that no transaction above Rs 3 lakh is permitted in cash. 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.
The government set an ambitious target of garnering Rs 72,500 crore through the disinvestment route in 2017-18, a 60 percent increase over the 2016-17 target of Rs 56,500 crore. This is the highest ever disinvestment target set by any government in India, outdoing the Rs 69,500 crore of 2015-16. As per Moody’s Investors Service “Moody’s expects the government to achieve its targets, based on achievable budget assumptions and demonstrated a commitment to fiscal prudence, but also notes that spending commitments are significant and structural hurdles to rapid increases in revenue collection are apparent”.
Along with these capsules, there are few injections, the government announced 10 per cent surcharge on income of Rs 50 lakh-1 crore. No exemption from long-term capital gains on transfer of listed shares if securities transaction tax not paid on the purchase of then unlisted shares bought after Oct 1, 2004. Limit of a cash donation to charitable trusts was reduced from Rs 10,000 to Rs 2,000.
With a macroscopic view, this budget seems to reasonably beneficial for common citizens and small businessmen. A clear sign of danger for those who think it’s a cakewalk to dodge tax rules in India. At the end, this budget gives the optimistic view about the “Ache- Din”.
About the Author:
Currently under the process of being an Electronics Engineer. Passionate about reading and writing about Socio-Economic happenings in India. A Neo-liberal by ideology but also respects and welcomes leftist thinking. Believes that debates and discussions are integral part of a healthy democracy. Strongly believes in Gandhian ideology of “Ahimsa”. Wants to pursue career in public service.