By V Mohan Rao
Mangaluru, Feb 16, 2017: The union budget 2017-18 presented by the Finance Minister on 1st February 2017 has a strong indelible imprint of the Prime Minister vision and road map for the growth of the Indian economy.
There is an imperative need to improve the agricultural scenario with a blend of multiple goods of growth, equity, employment and efficiency. To this end the budget aims at rejuvenating the agricultural sector worth a growth of 4.1 per cent. Reduction in tax rate on income of Rs. 2.5 lakh to Rs 5 lakh p.a. from 10 per cent to 5 per cent would be a bonanza for the middle class segment who are saddled with adverse affects of demonetisation. The government’s endeavour to further curb black money has culminated in banning of cash transactions above Rs. 3 lakhs. This perhaps will reduce the high artificial price of house/ flats in the realty sector at least in the metropolitan cities there by paving way for affordable houses. The allocation for the MGNREGA scheme has been increased from Rs.38,500 crore to 48,000 crore which is expected to boost employment generation in rural areas. The Rastriya Rail Samrakshan Kosh with a corpus of Rs 1 crore over 5 years may assuage the feelings of the passengers in the light of multiple rail accidents, Further liberalisation of FDI policy will boost the investment through automatic route.
In the wake of the huge black money circulation in the political circles albeit political funding the government has stream lined the political fund with a cap of Rs. 2000/- per donor that looks positive. Infrastructure plays a vital role in the developing of an economy. Allocation of Rs. 3.96 lakh crore in the sector would spur economic activities.
The overall budget appears to be optimistic for the future. Though the government planning on fiscal deficit is good it may be challenged by a short term cost that would have an adverse effect on GDP. However the government expects the short term costs to translate into long term benefits. By and large the government has focussed on various sectors of the economy but ironically some sensitive areas need to be relooked. The ceiling of Rs. 2000/- on cash donations to political parties will induce them to find more people to donate, which may defeat the move to restrict political funding. This is so because the donor’s anonymity will be protected.
In the wake of exorbitant premium on medi-claim policies the government should have increased the IT exemption limit under section 80D from Rs.30,000/- to Rs. 50,000/- for the senior citizen. The LIC pension for senior citizens with a lock in period of 10 years and assured income of 8 per cent will pose obstacle, in as much as most of the senior citizens are at the fag end of their lives and will not get access to their deposit in case of exigencies. Even the Banks are insisting on reduction of fixed deposit tenure from 5 years to 3 years for the public under the Income Tax exemption scheme.
The budget is silent on job creation, when the country is deprived of it, culminating in lakhs of graduates languishing without job. There is no focus on private investments. It is sceptical whether farmers income would double in five years with the budgetary allocation. If i am not mistaken it was mentioned in the earlier budget but did not turn out to be as required.
Eventually the economic growth can spur only if the implementing authority of the budget lives up to the expectations of the government, given the fact that the past experiences have belied the implementation especially with regard to MGNREGA scheme of the erstwhile and present government.
V Mohan Rao, Retired Deputy Chief Manager, Bank of India, Chennai Main Branch.