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The Union Budget presented for 2017-18 was path-breaking in many ways. The day of the tabling of Budget was shifted from the end of February to the first day of the month and the Railway Budget was integrated with the main Budget.
In Budget 2017, Finance Minister Arun Jaitley placed consumers before rigid fiscal discipline as he spelt out a carefully crafted plan to boost people’s spending power, create jobs and improve rural income, mixing welfare economics with a new wave of reforms.
Compared to guarded moves of the past, Jaitley used his fourth Budget to launch policy changes including modifying India’s political funding structure, but did not overhaul the corporate or individual income tax system as was widely expected.
He exempted foreign portfolio investors (FPIs) from indirect transfers. The Finance Minister offered the most to those at the lowest salary bracket, farmers and small businesses which endured the demonetisation shock in turn influencing the outcome in five assembly elections.
Jaitley also proposed a new law to confiscate assets of economic offenders who have left the country, a move that can pave the way for launching a crackdown on corporate loan defaulters.
Jaitley announced changes in electoral funding, under which political parties can only receive up to Rs 2,000 in cash from a single source, and proposed to ban cash transactions above Rs 3 lakh.
Populist measures
The minister announced Mission Antyodaya, an ambitious umbrella initiative aimed at lifting 10 million out of poverty by stitching together a raft of programmes.
All told, Jaitley announced a 24 percent jump in rural development programmes to Rs 1.87 lakh crore in 2017-18, reinforcing the point that villages remain central to the Modi government’s development model.
Farmers, an important political constituency especially in poll-bound Punjab and Uttar Pradesh, received pointed attention in the Budget 2017.
The Finance Minister also announced several measures to revamp infrastructure, expanded a scheme to give concessional loans to farmers, offered incentives to states to computerise primary agricultural credit societies (PACSs) and increased allocation to the National Bank for Agriculture and Rural Development to ease fund-flow for farmers.
MNREGS, the world’s largest job guarantee scheme, received top billing with budgetary allocation of Rs 48,000 crore, a 24 percent jump over the previous year’s Rs 38,500 crore.
He proposed the development of a composite poverty index in association with panchayats, and hiked allocations for the Pradhan Mantri Gramin Awas Yojana (PMGAY), Pradhan Mantri Gram Sadak Yojana and the Swachh Bharat Abhiyan among others.
India runs a string of poverty-relief programmes, including the MNREGS, but many of these are plagued by corruption and waste.
Jaitley raised the budget for programmes for scheduled castes (SCs) and scheduled tribes (STs). He doubled the credit target under the MUDRA scheme for raising the available loans to the unfunded and underfunded in 2017-18.
FIPB Scrapped
He had announced the abolition of the Foreign Investment Promotion Board (FIPB) — the nodal agency that vetted overseas investment applications — aimed at hastening fund flow into the economy.
He had said that new schemes will be launched in leather and footwear sector, while 100 Indian International Skill Centers will be established, giving a push to the government’s flagship Make India and Skill India schemes.
Digitisation Drive
Budget 2017 also had a mention of a scheme to enable NABARD to digitise 63,000 primary agricultural cooperatives, withdrew service charges on e-tickets booked via IRCTC, proposed an allocation at Rs 10,000 crore for Bharatnet, an umbrella plan for nation-wide broad-band connectivity.
Two new schemes — Refer and Bonus and the Aadhar Pay — to supplement the BHIM app were announced to fund digital payment systems in rural and remote areas as part of the government’s strategy to move India towards a “less-cash” society.
He had also proposed a payment regulatory board within the Reserve Bank of India (RBI) with oversight powers on digital payments.
Budget 2017 proposed changes in India’s corporate tax system, but left the headline corporate income tax rate was kept unchanged at 30 percent.
Simultaneously, the carry forward of minimum alternate tax (MAT) to 15 years from 10 years, but ruled out the abolition of MAT.
MAT was introduced in fiscal 1998 to address inequity in taxation of Indian corporations. Many companies, despite making profits, were hardly paying any taxes, claiming a web of exemptions.
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