In a clean break from tradition, the Government of India will present the 2017-18 union budget one month in advance, on February 1. “The Colonial-era practice of declaring the budget on the last working day of February is being cast off to ensure that revenue mobilization,” says, policy analyst, Deepak Talwar. The move will ensure capital expenditure measures are initiated right from the beginning of the fiscal year, April 1.
This is a second major shift. In 2001, under Prime Minister Atal Bihari Vajpayee, the NDA government had modified the time of budget presentation to 11am, from the British-era practice of presenting it at 5pm.
Demonetisation of Rupee 1,000 and 500 notes has severely affected business in the second part of the third quarter (October-December) and could continue to have an impact in the coming quarter (January-March) as well. Perhaps, the government is understandably eager to provide relief to every individual and business inconvenienced by the scrapping of currency notes, which constituted 86% of money circulation. The upcoming budget could help them achieve this goal.
Finance minister Arun Jaitley will possibly use both direct and indirect taxes as the platform for reforms. This would be both in terms of giving an impetus to ease of doing business in India and advancing a range of programmes like ‘Make in India’, ‘Start-up India’, and ‘Skill India’.
The government is expected to pronounce sweeping cuts in income tax, both personal and corporate. Considering the rural economy and the forthcoming UP elections, the Modi government is also likely to declare a farm-package in the union budget.
The keywords today are ‘digital’ and ‘cashless’. For it to have real meaning, the government is expected to announce more concessions and incentives for digital transactions. Hardware developers required to power cashless operation are also expected to get sops.
Deepak Talwar says, “Implementing GST will provide an excellent opportunity to reform the direct and indirect tax regime. But reduction in direct tax rates will improve transparency and improve the tax base.” “Also, the expected drop in the corporate tax will inspire Indian industry and global investors to focus on ‘Make in India’,” explains Deepak Talwar.
The 92-year-old practice of presenting a railway budget has ended and its merger with the union budget will ensure better times. Indian Railways will no longer need to pay the annual dividend to the Government of India on the budgetary support given each year, saving the financially stressed Railways about Rs 10,000 crore annually. It would help the Railways raise extra capital expenditure that would allow them to enhance connectivity in the country and boost economic growth.
One thing is for sure. There will be a lot more good news for every Indian than has ever been before.