What does an average Indian expect from the government? At the grass roots level, he expects enough job opportunities and skill development so that the ‘roti’ (food) is affordable. He expects a substantial net income to buy enough ‘kapda’ (clothes) for himself and his family. Further, he wishes ‘makaan’ (house) — a symbol of status and future security — to be within his reach.
He will be elated if his day-to-day operations, in terms of transport, doing business and other issues, are eased. Has the government — which moved away from the colonial legacy of presenting the budget on the last day of February, stopped distinguishing between the plan and non-plan expenditure, and combined railway and union budget — done enough to meet the expectations?
Let us take a closer look.
Human capital development
There are several key announcements that impact the quality of education and the availability of skilled manpower, which will help the next generation stay relevant and competent. Over 350 online courses will be offered through the “SWAYAM” platform. Creation of annual learning outcome measurement in schools, and innovation fund for secondary education, are welcome moves. Reformation of UGC and establishing a new authority for conducting all exams has been proposed, indicating the Government’s efforts to streamline regulatory architecture and improve the quality of education system.
The proposal of setting up AIIMS in Gujarat and Jharkhand, and increasing post-graduate medical seats by 5,000, will help develop specialists in clinical practice.
Additionally, the next phase for Skill India, STRIVE — Strengthening for Industrial Value Enhancement — will be launched with a budget of ₹2,200 crore, and will focus on providing vocational training to make job seekers market-ready.
Income tax
The Finance Minister raised the hopes of salaried class when he acknowledged their compliance of filing of returns. Will the limits of deductions under 80C or interest allowances of self-occupied property be increased? Or will there be any innovative move to reward honest tax payers? An average salaried Indian waited keenly.
But there were very few changes. The tax rate has been reduced from 10 per cent to 5 per cent for the ₹2.5 lakh-₹5 lakh slab.
There are some minor changes in rebate under Section 87A and a differential surcharge on income over ₹50 lakh. Barring these plans, the budget did not provide any major change, leaving the salaried middle class of India empty handed and tax rationalisation, a distant dream.
Real estate
Partially granting the “preferential treatment” wish, the government has provided a much-needed thrust to the real estate sector. India needs roughly 20 million houses in the affordable sector, and the Government has incentivised the stakeholders by giving “infrastructure status” to affordable housing. Cash component has been one of the key reasons for inflation in real assets like land and property. Making cash transactions over ₹3 lakh illegal will have a favourable impact on this sector as well.
Further, reducing the tax period for capital gains from three years to two and changing the indexation base from 1981 to a more realistic 2011, are appreciable moves. These positive measures will hopefully strengthen the edifice of the Indian real estate sector. However, the government should fortify the judicial framework, given the rising number of home litigation cases.
War of the wallets and digital India
A ray of hope shone for the internet savvy, the Finance Minister announced the withdrawal of service charges on e-tickets being booked through IRCTC, one of the most-used e-commerce platforms in India.
The BHIM app, a GOI initiative, is currently being used by over 1.25 crore people. It is positioned to attract more users through the referral bonus scheme for individuals and cash-back scheme for merchants, as announced in the Budget. If the network effects work out as planned, it will be very interesting to see the competition between BHIM and the upcoming “war of the wallets”.
India ranks a dismal 91 on the Networked Readiness Index (NRI) 2016 — a vital matrix of the World Economic Forum’s ‘The Global Information Technology Report 2016’. From the beginning, the government has indicated a clear commitment to channelise and shape digital India. Allocation of resources to baseline provisions like Bharat Net has rightly been stepped up to ₹10,000 crore. This will ensure that high-speed broadband on optical fibre will be available in more than 1.5 lakh Gram Panchayats with hotspots and access to digital services at a low tariff.
Some other provisions, such as the launch of “Aadhar Pay”, is justifiably targeted at the majority of India which does not have easy online access (or any kind of access) to bank accounts, and hence this could count as one of the first steps towards digitisation of rural India, where 70 per cent of our population resides.