DRIVING MOMENTUM, SUSTAINING GROWTH – BUDGET REPORT 2017
This was a Union Budget of many firsts, most notably, the first after the demand disruption in the wake of demonetisation. Conscious of consumer apprehension, the government has been careful to address specific needs of people from lower income groups who were most acutely affected by the currency overhaul. While addressing the immediate needs of these affected consumers, the government has also kept their eyes on the ball with a continued focus on infrastructure, development, fiscal consolidation and digital growth. Budget 2017 has largely been devoid of drama, choosing instead to carry on the consistent focus on cleaning up the system, improving the standard of living and becoming more inclusive by bringing marginalised sections of society into the formal fold of the administration. While the ensuing chapters by our domain experts offer insights on what the Budget means for specific sectors, there are a few overarching themes that stand out in the Finance Minister’s Budgetary allocation this year.
DEMONETISATION: Instead of trying to please everyone with a populist budget, the government displayed foresight by focusing the cushioning on those most affected in the aftermath of the November 8th announcement. To begin with, the tax burden has been reduced on people earning less than INR 5 lakh a year. There is also a thrust on infrastructure with the allocation of additional budgetary resources to drive growth to counter the slowdown post demonetisation. Undeniably, the real estate sector has been badly hit by demonetisation, so the reduction in lending rates for housing loans came as a relief. All the measures undertaken to improve the lot of rural India will result in increased disposable incomes for them. However, the task of bringing more people under the tax umbrella seems to be half done. There could have been more progress made on that front.
INCLUSION: Well before the Budget, the government has been taking bold strides to bring marginalised Indians into the formal economy. The Budget followed up on this with decisive moves to further this agenda. The plan includes building one crore houses for those currently without homes, reduction of income tax and simple one-page returns for people in low income groups. Not only has the administration specified short-term dates for the completion of the efforts at inclusion, but has quantified every endeavour. The government has set a target of bringing one crore households out of poverty by 2019, and achieving 100% rural electrification by 2018.
ACCESS: The Budget has worked hard to incorporate digitisation to connect with consumers as well as bring efficiencies into the government’s own administrative processes. From digital payments to digital identities and e-applications, the future promises to be transparent, efficient and devoid of bureaucratic layering. The massive push given to infrastructure includes the largest ever allocation to railways, and a concrete plan for improving road connectivity which will translate into lowered cost of logistics for companies. The focus on infrastructure is comprehensive in its coverage of road, railways, waterways and civil aviation.
CAPABILITY: To make India self-reliant has been the government’s mission since coming into power. A critical component of this is capability development. The Skill India mission has been designed to deliver to this end. This year’s Budget promises an innovation fund for secondary education, the focus on educationally backward blocks, the creation of additional post-graduation seats and courses on foreign languages. What marks Budget 2017 is a single-minded focus on long term gains and the restraint displayed by not giving in to populist expectations. An empowered and capable India, with access for the rural population is the clear goal. Going forward, the industry and consumers alike will wait to see how the execution of these plans unfold.
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