Budget Analysis 1

BUDGET REVIEW AND ANALYSIS

 


So, The Budget has been announced. And the reactions have started coming in. Let me clarify that I am not a seasoned economist. The blog consists my views arrived from the little knowledge that I have about Economy. The budget review is neutral.

Well firstly we must consider that Budget how much grand it may be in its perspective should be judged upon its implementation. We have seen the major announcement in the past by several governments but I am afraid that not much has come to the ground. But we must be optimistic. That is even my made up name.😀
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 Let's give this government the mandated 5 years and then discuss what fundamental changes have been observed and what out of the box thinking have been implemented. 
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Its quite logical to say that India is a complex economy( and by complex I mean India has numerous religions, castes, sub-castes, economic classes, highest population, illiteracy etc.) any significant change cannot happen in a year or so. Change requires time.

So to start with, we will keep the discussion simple enough for general understanding and will focus on takeaways rather than mighty numbers in crores and lakh crores.

You may also find the documented copy of financial budget 2016-2017 and economic survey on the official link:

http://indiabudget.nic.in/

Key takeaways about the condition of the economy:

 1. First time in the history of India, Budget has been announced so early i.e. at the start of the budget session.

{This will result in early allocation of funds and fast implementation of schemes}

 

2. Railway budget has been incorporated in the General Budget.

{This has put the railways at center stage of fiscal policy. No dividends need to be paid by the railways to the government saving more than 10,000 crores.}


3. CPI i.e. Commodity Pricing Index* based inflation declined from 6% in July 2016 to 3.4% in December 2016.

{This means there is a significant deceleration in prices of the commodities prescribed in government basket. In simple terms. Inflation is in control. A significant factor may be Demonetization.}

4. India’s Current Account Deficit* declined from about 1% of GDP last year to 0.3% of GDP in the first half of 2016. 

 

{This means imports are reducing and exports are increasing which is indeed a good sign.}

5. F.D.I. i.e. Foreign Direct Investments grew 36% in H1 2016-17 over H1 2015-16, despite 5% reduction in global FDI inflows.

{This means that Foreign money in terms of investments has increased significantly. This will result in establishment of more industries giving a push to technological deficit and also generate employment for lakhs of workforce.}


 6.The Indian economy has been robust to mild shocks and IMF forecasts, India to be one of the fastest growing major economies in 2017. 

{Global growth is merely 3.4% and India stands apart with 7+% Growth rate}

7. GDP forecast rate is between 7.1 to 7.5 % which is less than 7.6 % of last fiscal. The reason may be demonetization.

{Few quarters may be bleak but no permanent impact may be observed}

9. FSE Reserves i.e. Foreign Stock Exchange Reserves is at all time high i.e. $ 361 Billion.

{This may cover up import bills of 12 months. In simple words India can sustain imports of  12 months in case of economic crisis.}


 

  10. The Tagline for the upcoming fiscal is "“Transform, Energize and Clean India” 

 11. The 10 pillars of the budget allocation are:


 

a. Farmers : committed to double the income in 5 years;

b. Rural Population : providing employment & basic infrastructure;

c.Youth: energizing them through education, skills and jobs;

d. The Poor and the Underprivileged: strengthening the systems of social security, health care and affordable housing;

e. Infrastructure: for efficiency, productivity and quality of life;

f. Financial Sector : growth & stability by stronger institutions;

g. Digital Economy: for speed, accountability and transparency;

h. Public Service: effective governance and efficient service delivery through people’s participation;

i. Prudent Fiscal Management : to ensure optimal deployment of
resources and preserve fiscal stability

j. Tax Administration : honoring the honest.









 

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CAD: A current account deficit means the value of imports of goods / services / investment incomes is greater than the value of exports. It is sometimes referred to as a trade deficit.

CPI: The Consumer Price Index (CPI) is a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food and medical care.

That is all for now. Stay tuned for next part..

Chao🙋
Prashant