Amidst a lot of anticipation, and almost three months after one of the biggest gamechangers in the Indian economy — demonetisation — Finance Minister Arun Jaitley presented the Budget on the new date of February 1. Advancing the date of presentation will provide ministries an opportunity to plan resources more accurately, from the beginning of the financial year and allocate them accordingly before the monsoon.
The biggest change in this Budget was the clubbing of the Railway Budget with the Union Budget. This is also a positive move as it saves a lot of expenses. Preparing two different budgets means more expenditure, especially for the Railways, which pays an annual dividend for budgetary support received from the government. Moreover, the Railway Ministry will would now be free of political pressure and can focus better on addressing functional requirements.
Clean energy
Budget 2017 places emphasis on environmental sustainability, focussing on cleaner and cheaper forms of energy, such as solar and wind, by reducing duties on solar-tempered glass and wind-operated generators, and so on. With an allocation of ₹5,473 crore to the Ministry of New and Renewable Energy, the government has catalysed the shift towards cleaner energy. About 74 per cent of the Ministry’s allocation is directed towards grid-interactive renewables, with smaller allocations to hydro and bio-power.
The government also aims to power over 2,000 railway stations through solar energy. Not only is this an effort to reduce the carbon footprint at a national level but also a massive move to increasing awareness about sustainable and cleaner forms of energy.
Digital economy
In the quest to become a digital economy and to push people to adopt digital transactions, the Government has incentivised digital transactions. It has done away with the service charge on tickets booked on the IRCTC website and has increased spending to introduce new schemes to promote the Bhim app (mobile app developed by NPCI, intended to facilitate e-payments directly through banks) through referrals, cash back for traders, and so on.
Such measures are critical in an economy like ours, to counter the negative effects of demonetisation. It is also a great move to bring a change in the attitude of consumers as 85 per cent of the economy was still running based on cash payments pre-demonetization.
Enabling policies
The Government has decided to go for an expansionary monetary policy. This will make it possible for more investments to come in and boost spending by consumers. Due to the rise in liquidity with banks, following the large inflow of deposits nation-wide, they are in a position to offer loans at lower interest rates. This is, therefore, also a push to encourage companies to expand their businesses. In line with this aim, Mr Jaitley said he wants to boost private investment. Post-demonetisation and a slowed down economy, it is a great move to push consumer spending to counter the spill-over effects.
A contemporary economy like ours, needs exactly this. Not freebies from the government, but a platform and incentives to create markets that sustain on their own and cater to the needs of the marginal segments by being affordable.
The Budget has a specific focus on the vulnerable sections of the society. It has decreased the tax burden by over 50 per cent to the least paid segment of the working population. It has addressed the needs of a large section of the population by relieving the burden at the bottom of the pyramid, while taxing those at the top, in line with moving towards a more equitable society.
Infrastructure
The government has pepped up spending for infrastructure as investment in infrastructure must be made before demand catches up. The increase in spending for roads and highways signals a long-term commitment to boosting infra facilities.
Overall, the Union Budget 2017 is a balanced and a growth-oriented budget that largely addresses the needs of the vulnerable sections, even if the government has failed to present specific and measurable objectives as targets to achieve in the years to come. However, the positive sentiment post-Budget can be clearly seen in the market as the Sensex jumped 300 points, a three-month high, and the rupee too appreciated against the dollar by 24 paise. These are surely optimistic signals from the markets.