An eminent panel of experts put forth their expectations from forthcoming Budget 2018 in a special discussion conducted by Moneycontrol.
Is Modinomics compatible with Bharat? Is there going to be any cheer for the rural sector? Will the middle-class have reasons to smile after Finance Minister Jaitley finishes his speech in the afternoon on February 1? These were some of the questions that were thrown at experts in the first part of a three-part pre-Budget series moderated by Moneycontrol's Sakshi Batra. The guests were India Ratings Economist Devendra Pant, senior journalist Vinod Sharma (Hindustan Times), Deloitte partner Rohinton Sidhwa and Moneycontrol’s Economy Editor Gaurav Choudhury.
The audience included young students from the economics and commerce streams, who were armed with a volley of questions for the experts.
Here are some excerpts from the discussion:
Gaurav Choudhury: This is going to be a breakout Budget. Not because it is going to be the last full Budget before the 2019 polls, but also the first one after GST implementation. After the roll out of GST, the only significant indirect tax change is going to be in customs duty and price changes for consumers is most unlikely to happen because that nowadays happens after every GST Council meeting. The Gujarat election results will also play a part in the formulation of this year’s Budget.
The government would be exceedingly cautious on corporate taxes since no govt wants to be seen as the ‘govt of the rich’. Corporate tax is one symbol which the government would not like to wear since elections are scheduled to be held next year.
Vinod Sharma: This Budget will have to address the concerns of the youngsters. Disruption has to be followed by building. Once you disrupt, you have to focus on building. The Budget will have to do something to consolidate the buying habits of the citizens. Another important area that the Budget needs to do is address rural concerns.
In most states, governments have failed. For example, despite Minimum Support Price (MSP) farmers had to resort to middlemen. Small and medium enterprises sector is a job generator and I sincerely hope the Budget provides significant impetus to this sector.
Budget 2018 will also have to attempt to give some relief to the middle-class. The amount of tax an average Indian pays has to be brought down. There will be some reduction on the income-tax front and middle-class is likely to benefit from this Budget.
Devendra Pant: Rural distress is the biggest problem right now. Both GST and note ban were aimed at formalisation of economy. We moved from informal economy to formal economy and that transition has brought some pain. Also, household savings are decreasing year after year and I hope we are able to fix our savings and investments
Expansion of non-agricultural activities have saved us from rural distress and that is an area where the government needs to focus in this year’s Budget.
Rohinton Sidhwa: There has been a spike in tax returns but it is settling down. The government is highly-dependent on investments and generating jobs is the need of the hour. There are also chances that the corporate tax will be lowered by one to two percentage points.
Select questions from the audience:
What can the education sector expect from Budget 2018?
Gaurav Choudhury: We can expect a substantial hike in social sector spending and given the narrative, the government has not been able to shrug off the perception that it is close to the corporate. See substantial hike in education, NREGA and healthcare.
What can we expect for the agriculture sector?
Gaurav Choudhury: This year, the focus will shift to farmers’ income. Despite record output, farmers’ incomes have fallen and we need to find a way out. Deflationary trend is affecting farmers and I expect FM Arun Jaitley to announce some sort of a price mechanism. Unfortunately, media plays out rural distress only during elections.Vinod Sharma: There should be a policy to make farming a healthy remunerative option. The Indian political class is guilty of not thinking seriously about farmers and uses the Budget as a tool to fulfil short-term objectives.