Union Budget 2016 – Score card for the Finance Minister
long ago, the budget day including the Railway budget used to be a pretty
important day for the cross-section of Indian Society. The Railway budget was
viewed as a pointer to what can be expected over the next couple of days from
the Union Budget. Slowly, but surely, we seem to have moved out of the budget
euphoria. Everything appears to be moving on an even keel rather than
presenting big surprises. Populist budgets are perhaps behind us and rightly
so. What the FM has attempted in his second full budget is more pragmatic and
focuses more on the agricultural sector that impacts the lives of a majority of
our population living below the poverty line. Although the predominance of
agriculture in Indian economy is waning a bit, we can ill afford to ignore our
farmers. The cities and towns will continue to depend on them for the daily
staple. Therefore, with the rural emphasis, Mr. Jaitley has perhaps addressed
the long term objectives of the nation.
aam aadmi has got used to the high price of essential commodities and his
monthly budget refuses to even glance northwards. It is always on a southbound
trajectory. With our population growth
continuing to climb year after year, it is only natural that the government
needs more money to cater to the aspirations of a growing society. On the infrastructure front, we are still
miles behind many developing/developed nations.
Nevertheless we can be proud that road connectivity between most major
cities in India today is impressive.
keen jerk reactions from the stock markets gave opposition parties the
opportunity of some caustic comments and understandably, they seized every bit
of it. But, a day later the market has reversed the losses and impressively so
with over 800 points on the sensex and more than 240 points on the Nifty, which
is also the biggest single day gain in recent times. If the momentum gained today can be
sustained, Indian bourses can well be on the road to reversing much of the
losses suffered earlier in the year.
Focus on Agriculture and the rural
core of this budget can be termed a Kissan budget and that should make lots of
people in rural India happy. Once the
farmers getting remunerative prices for what they produce and the constant fear
of poor monsoons or crops being destroyed an excess of rains, one can expect to
see a green revolution of sorts.
Bringing in the insurance sector to play a major role in this direction
is a laudable measure.
woes of the salaried class have been addressed to some extent. Mr. Jaitley has
put a little more money into the pockets of the salaried class. While the
quantum is far too inadequate for a daily diwali, it will help them tide over
price rises on other fronts. There was uproar on the proposal to tax PF
withdrawals. However, the position has since been clarified and only the
interest component is now proposed to be taxed.
reality sector is another big gainer from direct as well as indirect measures
provided in the budget. This is also seen as a smart move by the FM since
concessions extended to the realty sector will generate additional revenue for
the government from a plethora of allied industries while providing large scale
employment in the rural sector. The measures also come as a huge relief for the
aam aadmi since housing is set to become affordable for the EWS sector. Service
tax exemption for new homes below 60 sq. meters should make the middle class
home buyer extremely happy. This should also help the vision of the prime
minister’s vision of ‘housing for all’ by 2022 a reality. The salaried class
will benefit from additional concessions given in income-tax including for the
first time home buyers. Indirect benefits from these concessions will also flow
to the steel and cement sector in particular.
keeping with the ‘Make in India’ scheme announced by the Prime Minister
earlier, start ups have received considerable concessions in this budget. Start
ups paying no tax on profits in the first 3/5 years will encourage more venture
capital funds to flow in. Perhaps, this
is also one sector that has received the best attention of the FM. A further
promise is to tweak the Companies Act to enable registration of start ups in
just 24 hours. With knowledge based
industries growing at a rapid pace, this measure should encourage young talent
to explore more entrepreneurial opportunities.
is another sector that has received significant fillip from the budget. With a
total outlay of Rs 2,21,246
crores in the budget, this sector is
bound to witness a flurry of activity in the coming days. The pace of road
construction is set at an ambitious 100 kms every day. Many of us are already
experiencing the benefit of good roads in ushering in all round economic
Education has received considerable attention
from the FM but this is perhaps one sector where enough is never enough. There
is an urgent need for government intervention into private primary education
that is virtually breaking the back of parents across the nation. Lots can be done in this direction away from
the budget and one hopes that the government is listening.
The 25,000 crores allocated for
recapitalization of banks is just a drop in the ocean. Hopefully the coming
days will see lot of action on the NPA front and strengthening of public sector
bank balance sheets. The practice of large business owners going scot free
after defaulting several crores must go. Every single individual or corporate
who borrows from the bank should be individually responsible for the repayment.
Systemic infirmities need to be addressed head on and securitization of loans
should go beyond mere paper work.