Following the presentation of the Union Budget 2017-2018 by the Finance Minister of India, Arun Jaitley, the faculty members of the School of Business, The Assam Kaziranga University, expressed their views and concerns, calling the budget a a mix bag of surprises, promises and bedazzlement of hopes.
The Hon’ Finance Minister attempted to assuage the masses by assuring that the effects of Demonetization would not spillover to the next fiscal. The agriculture sector stands to gain a lot if the promises made are implemented with utmost sincerity. Provisions of insurance to sowing farmers against natural calamities with a waiver of 60 days interest, the increase of NABARD fund to 40,000 crore along with minilabs in Krishi Vigyan Kendras for soil testing and micro irrigation, the fund for NABARD with initial corpus of 5000 crore irrigation corpus increased from 20,000 crore to 40,000 crore, and the issuance of soil cards, all of these together can actually revitalize the agriculture sector, provided the information is available to the needy with zero cost and zero time lag.
The rural population stands to gain a lot because for the first time a government has fixed a target for itself that it will bring 1 crore households out of poverty and will double the income of farmers by spending Rs. 3 lakh crore through MGNREGA, and will ensure women participation up to 55%. Few more promises for this sector, if implemented successfully, can transform rural India, like providing 1 crore houses to the homeless and ensuring 100% rural electrification by 2018.
“Though India has the largest number of youth, the union budget has not addressed their expectations as was expected”, says Prof. Dr. Sudhanshu Verma, Associate Dean and Professor of Finance at Kaziranga University. Apart from an assurance that the government will focus on 3479 educationally backward blocks, and courses on foreign languages will be introduced, and 5000 seats will be created for PG courses in medical sciences, there is not much to deliberate upon.
The government gave due diligence to the poor with healthcare and allocated 500 crore to Mahila Shakthi Kendras along with 1,84,632 crore for women and children. The government promised to eradicate TB by 2025 and transform Health sub centers into health wellness centers. The most salient feature of the speech of this section was the introduction of Aadhaar based smart cards for senior citizens carrying the medical records of senior citizens to monitor their health.
The Financial sector is empowered with several features, like 90% FDI inflows are now automated, which will speed up the process and FIPB would be abolished in 2017-18, and revised mechanism to ensure time bound listing of CPSEs. The provision to make Head Post Office as the central office for rendering passport services, would help so many living in distant corners of India. The promise to introduce a legislative change or new law to confiscate the assets of big time offenders including economic offenders within the country, is a much awaited reform.
“The Finance Minister has played a master stroke by limiting the cash donations to political parties up to Rs 2000 only. With this, he has showed the will to correct the legislature itself, which apparently was incorrigible” added Prof. Dr. Verma.
Mr. Jaitley showed grave concerns by stating that India’s tax to GDP ratio is not favorable. India is a country where tax evasion is a way of life. He gave statistics regarding number of tax payers in different slabs and number of people travelling by air or how many file the tax returns and deposits. The much awaited reforms on Tax structure and tax slabs have also got two pronged redress. The Government reduced existing tax rate on personal income of Rs 2.5 lakh-5 lakh to 5% from 10%. This will provide relief on a personal front, mainly to the salaried group in the middle class and to ease the pains of demonetization. For quick refund of tax returns, the time-frame is reduced to 12 months. But keeping the 20% tax rate as intact for the salaries between 5 lakh to 10 lakh seems a bit irrational. The proposal to reduce tax for small companies with turnover of Rs 50 cr to 25% is intended to make MSME companies more viable and to move them into the formal economy. Around 67 lakh companies fall within this category. No change in the capital gain tax, particularly long-term in the budget which will cheer the investing fraternity. And provisions like Zero tax liability on those with income of upto Rs. 3 lakh and ease of filing a single page return for individuals having income less than 5 lakh will motivate more people to enter the tax net.
Prof G. P. Bhandari, Professor of Economics in the KU School of Business, is enthusiastic about the budget and has praised the budget on various accounts like recommended 3% fiscal deficit for three years with deviation of 0.5% of GDP as a good move to start with. No service charge on tickets booked through IRCTC, 3,500 km of railway lines to be commissioned this year up from 2,800 km last year, offer of competitive ticket booking facility and allocation of Rs. 64,000 crore for highways. Prof. Bhandari has omened well for farmers, rural areas, agriculture, infrastructure development and has emphasized about the far reaching, trickle down effects of all these changes.
Mr. Sabyasachi Mondal, Professor of Finance, opined that “The thrust for the budget is to spur economic growth, ration the benefit of the improved infrastructure and financial schemes to the lower stratum of the society and curtail corruption”. The steps taken on this regard involves sanctioning more amount for infrastructure projects, helping increase personal spending of salaried class by reducing income taxes and bringing transparency to political funding among others. The small and medium enterprises got a boost in terms of reduction of corporate tax to 25% for companies with annual turnover of 50 lakhs or less. Professor Mondal is hopeful that the features of the budget will attract more entrepreneurial ventures which in turn will boost job growth. The FIPB, the body for approving inbound investment proposals, is abolished now to make FDI hassle free. Moreover, the infrastructural investment allocation including road, rail and inland waterways is increased to around 3.8 lakh crores, which is unprecedented. To curtail corruption the government has also banned cash transaction above Rs. 3 lakhs.”
Ms. Mridusmita Chaudhary, Professor of Economics, appreciated the budget on account of allocation of Rs. 100 billion to recapitalization the banks. But, more capitalinfusion is required to meet the BASEL-III norms, measures to boost affordable housing and launch of SWAYAM platform to provide universal access to education. It is an online portal and will have presence in DTH as well to reach a large number of people. She praised the targeted Fiscal deficit of 3.2% of GDP instead of 3% as per the fiscal consolidation and asserted that this target is flexible and the Government candeviate from it by 0.5%. It has been done to give more policy space to the Government.
The move of No Big Capital Infusion for public sector banks, along with Allowable provision for NPA increased to 8% from 7.5% to decrease the tax liability, was praised by Mr. Sushanta K. Nandi, Professor of Accounting and Finance. He was of the opinion that the budget may indirectly benefit the banking sector. As the fiscal deficit is 3.2 per cent, so the net borrowing will be under control. The ban of all cash transactions above Rs. 3 lakh beginning April 1, 2017, will help check black money.
A careful analysis of the Union Budget 2017-2018 leads us to a scenario where we Indians have to show the willingness to correct almost all the aberrations committed in the past. The correction process will cause some distress, but all the visions pictured and promises made, are actually painting a beautiful picture of a bright and shining India. ( Press Release )