Daijiworld Media Network - Mangaluru
Mangaluru, Feb 1: Unlike the earlier budgets, the General Budget 2017 has been quite a pleasant one as it failed to give any shock treatments or populist schemes to the general public as is evident from the reaction of a cross section of the society. While the salaried class is still sulking despite reduction of income tax from 10 percent to 5 percent for those within the Rs 5 lac income, generally the budget has received a thumps up from a cross section of the society.
Though the economists hail it as a pro-rural, pro-salaried, growth-oriented budget as the thrust is on rural economy, agriculture, rural housing, digitisation and cashless economy, the general feeling is that the budget has everyone smiling if not overjoyed. Of course no budget can satisfy every individual in a country whatever might be the economic or political compulsions and that too in a country like India.
As Dr G V Joshi, professor of Economics at Justice K S Hegde Institute of Management, Nitte, pointed out, "No budget can satisfy the aspirations of all the people in a society. However, there was a need in this year’s budget to give a thrust for racing growth and for toning the development path. The finance minister has done just that by giving push to agriculture, rural development, infrastructure development, rural housing and digitisation." Dr Joshi went on to add that the finance minister has studied the Indian economic situation very intently. "It is better than the earlier budgets for the simple reason that it gives lot of information on subjects like revenue expenditure and also gives a clear road map for long term development of the country."
CA S S Nayak, well known chartered accountant says that this year’s budget was eagerly awaited because it was the first budget post demonetisation and also due to the fact that the railways budget has been merged with the general budget. S S Nayak however, feels that merging the railway budget with the general budget is not a good sign. He also pointed out that earlier budget meant we could expect lot of gimmicks, shocks or surprises in terms of increase or decrease in prices of goods and lot of populist measures, which have taken a backseat in the general budget. S S Nayak says, "As expected this budget is in tune with the government’s desire to curtail black money and a step closer towards a cashless economy. Reduction of long term capital gains from 3 to 2 years is a welcome decision and the changing the basic index from 1981 to 2001 will greatly benefit the people." S S Nayak however, says that the salaried class' disappointment cannot be justified as they have been rewarded albeit indirectly by reducing the rate of income tax to 5 percent to those within the Rs 5 lac bracket income. By doing this the finance minister wants to bring more people under the tax rate bracket, which is a good development." S S Nayak sums up the budget: 'it is a reward for tax payers and a big punishment for tax evaders'.
Echoing similar sentiments as the one expressed by Dr Joshi, Dr Vigneshwar Varmudy, HoD of Economics, Vivekananda College Puttur, terms it as a pro-rural oriented budget with emphasis on rural infrastructure. This is evident from the fact that a record of Rs 48,000 crore has been allocated for MNREGA, the highest ever allocation for this scheme, which would boost rural employment to a considerable degree. There is also the focus on the youth as the budget provides for increasing the number of skill development centres in more than 600 centres and this would pave the way for employment generation. I must say that the government has taken a bold step to collect taxes indirectly. This is evident as the budget has reduced tax rates from 30 percent to 25 percent to companies with more than Rs 50 crore turnover. This is a good move considering that 96 percent of companies come under Rs 50 crore turnover."
But president of Kanara Chamber of Commerce and Industry Jeevan Saldanha strikes a word of caution saying, "There is no clarity whether this includes only private and public limited enterprises and not for individual or partnership firms. This ambiguity needs to be cleared before we jump to conclusions." Jeevan Saldanha further says, "Overall it is a good budget with no retrograde or negative steps particularly no retrospective effects of tax. It is a pro working class budget providing for all round growth. There is something to cheer for the real estate as this budget provides capital gains calculation on development of joint properties after the completion and not at the beginning of the project." When asked about what steps are taken in the budget to deal with demonetisation shock Jeevan points out "the very fact that cash transactions has been limited to Rs 3 lacs is a step in the right direction to curb black money. Measures are also taken by emphasizing on digitisation to move towards a cashless economy and thrust on development is the direct result of slowdown of economic growth.
While Dr G V Joshi is in full praise of the budget, he says that the finance minister has exhibited his political shrewdness by not mixing economic survey indicators in his budget speech. He says the finance minister has accepted that there is a slight set back to the economy which is in the expected lines but he has done his homework and shown political maturity.
Though Jeevan Saldanha is apprehensive about the reduction in tax rates to companies, businessmen Harish Maheshwari is quite upbeat as he feels that the budget would provide more disposable income increased the spending power of the people which would in turn propel economic growth. "The emphasis on cashless economy would go a long way in annihilating parallel economy. Rural housing has been given due importance in the budget."
Though everyone gloats about cut in tax rates from 10 to 5 percent, Shobha Rao, who is the chief manager of Karnataka Bank regional office says the general budget has failed to satisfy the aspirations of the middle class salaried people. "Saving could have been encouraged by increasing the standard deduction limits and also by increasing the exemption on medical insurance premium." However, she is happy about the steps taken by the government to limit cash transactions to Rs 3 lac only so as to bring the economy under the accounting system. ‘This would make way for curbing black money in a big way," Shobha opines.
General Budget 2017 assumed importance for several reasons that included among other things assessing post demonetization impact and corrective measures needed as demonetisation has hurt India’s growth considerably. Also the fact that 5 states are going for elections in the next few days, merger of rail budget with general budget and advancement of the budget from the last working day of February to first day of February thus putting an end to the practice of the colonial era are other major factors why this year’s budget assumed significance.
S S Nayak says advancement of the budget is of vital importance as it helps the entire budgetary exercise and would ensure speedy implementation of schemes. It also would help companies and households to finalize their savings, investment and tax payments. Of course the budget has failed to give any surprises as some of the popular schemes were already announced by the Prime Minister on December 31, 2016.
In fact, the historic budget day began with huge uncertainty as television channels began giving ‘breaking news’ saying budget might be postponed following death of a sitting MP. Luckily good sense prevailed and after the cabinet meeting the budget was presented as planned. It can be said that the finance minister has given a budget cheering up everyone except his political opponents.
As Vigneshwar Varmudy has rightly pointed out usually the first two budgets of the government are people oriented and the next two will be development oriented and the last one will be a populist budget. This is the 4th budget of the government and as expected is growth oriented. "There will be real smiles in the long run as the real benefits of the budget will start tickling down a few years from now."