Finance Minister Arun Jaitley presented the Union Budget 2017-2018 in Lok Sabha on 1 February 2017. The impacts of the budget 2017 on Indian economy were being speculated by experts and common people because of three major reasons. First, it was the first time since 1924 that the Railway Budget was presented together with the Union Budget. Second, the impacts of demonetization had caused a lot of curiosity and questions among people. Third, there had been expectations that the budget will clear the ambiguity around GST bill.
Here, we have tried to analyze the impacts of budget 2017 on Indian Economy. In budget 2017, there are many key announcements and we have elaborated how they will impact the respective industries and sectors of the economy.
1. Impacts of Reforms in Political parties’ funding
The government took a bold step to pave the way for creating transparency in the funding of political parties in India. Earlier the maximum amount a political party could receive in cash donation was 20,000. And the sources of this money were not clearly known, hence, it was creating the chances of unidentified money flowing into the funds of political parties. From now on, the maximum amount political party can receive in cash donation will be Rs 2000 from any one source.
Political parties will be authorized to receive donations by digital mode or cheque. It was also proposed that RBI would act to enable issuance of electoral bonds in accordance with a scheme by the government of India. The donor could purchase bonds from authorized banks and donations would be redeemable only in register ed accounts of the party. This step will also put an end to the flow of black money into the funds of political parties.
2. Impacts on Taxes and finance
As the data suggests most of the people who are eligible to pay taxes in India have been evading it. To counter this problem, the government has decided to widen tax net as income tax payers are mostly salaried employees. The government claimed that the burden of tax evaders was shared by the salaried tax payers so it took initiatives to reduce tax burden on income tax payers. The government reduced the rate of income tax on income between Rs. 2.5 lakh and Rs. 5 lakh to 5 % from the current 10%.
Basic custom duty for LNG reduced from 2.5% from 5%. This will reduce the price of LNG and help to reduce the burden from low- income households.
Limit of cash donations by charitable trust brought down from Rs.10,000 to Rs 2,000.
In India, around 67 lakh companies fall within the small business category. In this budget, the government has taken a step to assist small businesses. Now, small businesses that have a turnover of Rs.50 crore will have to pay 25% tax as against the 30% they had to pay earlier.
The government has also accepted the recommendation of special investigation team (SIT) which was formed to scrutinize black money.
The process of tax filing is facilitated by the government. Now, one- page tax filing form would be issued for taxable income under Rs.5 lakh.
Apart from it, 10% Surcharge would be imposed on individuals with annual income between Rs 50 lakh and Rs. 1 crore.
The government also worked in the direction of easing the legal procedure for the victims of dishonored cheques. It was announced that government will amend Negotiable Instruments Act to ensure that holders of dishonored cheques get payment easily.
3. Impacts on Digital Economy
The importance of digitizing Indian economy was cited by the finance minister in the budget speech. And this idea has been in the main agenda of the government because of its benefits on Indian economy. In the budget, it was made clear that government is to launch two new schemes to promote BHIM app, including cashback scheme for merchants. In order to assist people who don’t have mobile phones government will launch Aadhaar Pay.
For strengthening financial inclusion in the digital economy government would focus on rural and semi-urban areas. In this direction, a government’s panel on digital payments has recommended structural reforms in rural and semi-urban areas.
For providing security to the digital payments, payment regulatory board would be established at RBI.
4. Railway Budget and Impacts
The finance minister announced a Rail Sanrakshan Kosh with a corpus of Rs.1 lakh crore for Indian Railways. The government will arrange a seed fund and the rest of the fund will be generated by the Railways.
In order to strengthen the security of Railways, level crossings which bear no names are proposed to be eliminated by 2020.
The length of railways lines across the country would be increased by3500 which will cover those areas which are in need. Keeping the religiosity of the Indian society in view, dedicated trains would be conducted for religious tourism.
A big step was taken for the sanitation of Indian Railways all coaches of Indian Railways will be fitted with bio-toilet by 2019. On the basis of cleanliness, at least 25 stations are expected to be awarded during 2017-18. For taking care of differently abled-citizens, 500 stations will be made differently abled-friendly by providing escalators and lifts.
Apart from it, the government will announce a new metro rail policy, this will create new jobs for the youth to modernize the Metro infrastructure.
There would be no service charge imposed on those who book tickets on IRCTC. This will reduce the ticket price and would be beneficial for common people.
5. Impacts on Agriculture Sector
The government took a big step where it pledged to double the income of farmers in five years.
The government also took steps to strengthen social security net for farmers. For solving this purpose, RS.10 lakh crore was earmarked for agricultural credit and Fasal beema yojana coverage was increased to 40 percent in 2017-18 and 50 percent in 2018-19.
In order to provide legal assistance to the farmers, a modern law on contract farming would be circulated in all states.
6. Impacts on Health sector
Government laid beneficiary provisions for senior citizens. Now they will be provided Aadhar cards mentioning their health conditions. This will help in accessing the health conditions of the senior citizens.
In order to widen the quality health care net 2 new AIIMS to come up in Jharkhand in Gujarat.
A step was taken for the regulatory reform in medical sectors and a push for more DNB courses was given in reputed medical colleges.
The government also noticed the health problems in grass root areas. For that matter, more doctors will be appointed on the tertiary level.
In order to provide clean water to all people in the country, around 28,000 fluoride and arsenic and Flouride -affected areas to get safe drinking water in the next four years.
7. Impacts on Rural sector
The budget allocations for rural areas along with agricultural and allied sector for 2017-18 is fixed at Rs. 1,87,223 crore. This amount is 24% more than the allotted amount of preceding year.
The government has targeted that 50,000- gram panchayat would be made poverty free.
For the purpose of transparency, all the MGNREGA assets would be geo-tagged and put in public domain.
The total allocation for MGNREGA is Rs. 3 lakh crore, it will help to realize the government’s target to double farmer’s income.
The budget showed that women participation in MGNREGA has increased from 48% to 55%.
8. Impacts on Housing sector
The housing sector was granted the status of infrastructure after years of demands. It will be helpful in providing housing loans to the needy people as it will facilitate the loaning procedures.
This will also boost the delayed residential projects which is a positive sign for real estate sector.
The government has planned to construct1 crore houses under housing program.
Pradhan Mantri Awas Yojana was allocated Rs. 23,000 crore for this fiscal year.
9. Impacts on Energy Industry
The government has pledged to assure electrification to 100 percent villages by 1 March 2018. for which an extra Rs4,814 crore will be earmarked for the next fiscal year,
And, the solar energy sector was given a push for 20,000 MW increase in solar energy output.
10. Impacts on Education
The government has set up an innovation fund to promote local innovation.
National Testing Agency would be given responsibility to transform higher studies and entrance exam structure.
The government has proposed to launch a system of measuring learning in schools which will be a cornerstone for enhancing learning in Indian schools. For this, total 3,479 educationally backward blocks would chosen where the government proposes to introduce the practice of measuring annual learning outcome in schools.
Pradhan Mantri Kaushal Kendras would be spread to more than 600 districts across the country. An investment of Rs 2,200 crore is set up for vocational training across the country.
As this budget was much anticipated by the experts that how it will trun into and what would be the direction of Indian economy after its presentation. Now, all these speculations have been put to rest with the Budget 2017 speech by the finance minister Arun Jaitley. Therefore, we have analyzed the overall budget 2017 impacts on Indian economy. From the above analysis, we must say that India is walking on a concret road with rock solid dream and able leadership.