The Budget 2017-18 has come at a critical time, preceded by one of the largest shocks to the economy. The common man had supported Prime Minister Narendra Modi in his fight against black money by standing in queue for hours, both to exchange old notes under the demonetisation drive launched in November and to subsequently draw the minimum amounts mandated by the government.
In the backdrop of the successful completion of demonetisation and the subsequent remonetisation of banks, Finance Minister Jaitley had a tough task in meeting high expectations from the Budget.
Here are five key takeaway from Budget 2017 that will shape the country’s future:
Agriculture, rural focus
Budget 2017 carries forward the momentum of enhancing the core infrastructure, basic inputs, and connectivity across rural and urban India. The Budget announced the setting up of mini labs in Krishi Vigyan Kendras and increasing the irrigation corpus to ₹40,000 crore, pushing further the access to irrigation and understanding of soil and crop patterns. This will enhance crop productivity levels as well as farmers’ incomes.
The highest ever allocation of ₹48,000 crore for the MGNREGS will help boost employment generation in rural areas and, unlike last year, this year the government’s flagship scheme is likely to begin the next fiscal with a clean slate.
The enhanced outlay on the Bharat Net project will act as a stimulus for rural connectivity, which is necessary for last-mile channels for value creation and delivery.
Improved eco-system for small units
Budget 2017 focuses on three main actions in this direction — hardware for cashless transactions, benefit for MSMEs, and availability of skilled resources. Steps towards reducing the corporate tax rate for small companies will have a positive impact on the viability and sustainability of around 97 per cent (67 lakh) businesses in India. Setting up 100 India International Skill Centres (ISCs) to maximise the market-based potential of the youth has potential multiplier benefits.
Increase in funds flow
FDI inflows into India went up by 36 per cent in 2016. To speed up FDI flows, Budget 2017 announced the phasing out of the Foreign Investment Promotion Board (FIPB) by 2018 and pushing FDI reforms further. The abolition of FIPB is considered a significant step in easing the inflow of foreign investments, thereby enhancing competition across industries.
Focus on transparency
The step to bringing the transparency in funding of political parties by reducing the cash limit for donations and launching electoral bonds is transformative. It is a major step towards cleansing the system from the evils of corruption and will send a positive signal to international companies, which feel constrained in entering or scaling their operations in India due to wide-spread corruption and lack of transparency.
Consumption patterns
Budget 2017 highlights three main steps to influence consumption patterns. The first involves increasing the disposable income of individuals by reducing the tax rate from 10 per cent to 5 per cent for the income slab of ₹2.5 lakh to ₹5 lakh. The second step relates to providing infrastructure status to affordable housing, refinancing of individual housing loans and reduction in lending rates for affordable housing. The third step will stimulate cashless transactions by removing service charges on e-ticket rail bookings by IRCTC. This will lead to savings of ₹260 lakh a day.
Another important Budget aim is the commitment of the government to reduce the debt-to-equity ratio. Coming at a time of global uncertainty, the Budget is a pragmatic, global-oriented and policy-driven exercise, taking forward the reform agenda in a convincing and progressive manner.
(The writer is a student of PGPM 2017 at Great Lakes Institute of Management.)