Economics Concepts: Budget Analysis 3

Budget Analysis

4. Finance:

1.Further liberalization of FDI policy is under consideration:

{More Inflows of foreign money bringing employment}

2. A Computer Emergency Response Team for our Financial Sector :

{ To deal with cyber threats}

3. An integrated public sector ‘oil major’ like British Petroleum

{Improve yield of indigenous oil majors}

4. Indradhanush 10,000 crores for recapitalisation:

{To pump money into the system of PSBs to kickstart lending}

5. Pradhan Mantri Mudra Yojana for startup lending to Backwards and Women aspiring entrepreneurs:

{More Employment Opportunities}

6. Focus on BHIM App and Aadhaar enabled pay:

{A push to digital economy}

5. Fiscal Management:

1. Capital expenditure increased by 25.4%

{Denotes expenditure on Asset management the main priority}

2. Fiscal deficit for 2017-18 is targeted at 3.2% of GDP

{ Government has to borrow 3.2 percent of the total expenditure. Still OK figure }

3. Net market borrowing of Government restricted to 3.48 lakh crores.

{Less borrowing means less servicing of debt}

4. Revenue Deficit to be 1.9 % against 2.3% for previous fiscal.

{ A good step as less money needs to be borrowed for regular upkeep of government, law, police etc}

5. Taxation:

1. Small firms with turnover up to Rs 50 crore to pay 25% tax now, instead of 30%:

{ The firms now can save 5% of their profit and can use it for expansion. This will spur growth and employment}

2. No cash transaction above Rs 3 lakhs:

{Less Generation of Black Money}

3. Maximum cash donation any party can receive will be Rs 2000 from one source:

{Political System Cleansing but depends on its implementation}

4. An amendment being proposed in RBI Act to enable the issuance of electoral bonds for political funding:

{Political Funding can be done through capital Markets. An innovative step indeed}

5. Income tax rate from 10% to 5% for tax slab of Rs 250,000 to Rs 500,000:

{ More money into the hand of people. There is an expectation of more tax compliance. Persons with taxable income over Rs 5 lakh up to Rs 50 lakh will pay Rs 12875 less.}

6. Surcharge of 10% for those whose annual income is Rs 50 lakh to 1 crore:

{Revenue Generation to make up the loss from the reduction in smaller brackets. A progressive taxation indeed}

7. 15% surcharge on incomes above Rs 1 crore to continue:

{Progressive tax regime}

8. Implemetation of Goods and Services Tax:

{ It will create Uniform Market In India. We will talk about it separately Soon}

.

A total of 27+ lakh crores is being used up for allocation. The Numbers above seems tempting and the finance minister has done a commendable job in balancing the expenditure. A long-term vision can be seen in the budget. Following points might have been kept in mind while its preparation:

1. Infrastructure development

2. Housing development

3. Focus on skill development

4. Focus on exports

5. More money in hands of rural India and poverty alleviation.

6. Increasing Human Development Index.

etc.

Overall it seems a balanced budget given all schemes is implemented pragmatically.

Although, few areas have been left off:

1. Primary Education Rejuvenation

2. Health Services Coverage for all

3. Transportation Upliftment

4. Universal health Insurance Scheme

etc. etc.

Also, no budget can be perfect. Sadly the majority of citizens in India do not pay taxes. This causes a restriction in spending for various projects. Despite such a large economy, less than 4% citizens pay taxes. But the sales of luxury cars, flats, abroad visit is at all-time high. This shows a clear case of tax evasion.

So, I would urge all citizens to spread the word and pay taxes honestly and encourage others also to contribute in the development of the country.

That takes us to the end of this long review. Hope you liked it. There could be something I might have missed.

Wednesday, 1 February 2017

Budget Analysis 3