Finance Minister Arun Jaitley will present the Union budget for the 2017-18 fiscal on February 1, 2017. The country saw one of the biggest economic experiments taken by the government of the day in the form of demonetisation and the gigantic tax reform in the form of Goods and Services Tax, which is still awaiting rollout.
The financial situation in the country is critical and the economy is going through one of the biggest tests in recent history. In such a time, all eyes will be on the finance minister to see what he pulls out of his traditional battered brown leather briefcase that will clear the economic roadmap for the country in the next fiscal.
Jaitley will break away from tradition and after a period of 92 years of separate presentation of Union Budget and Railway budget, both will be presented as a combined document on an advanced date than the commonly followed schedule of end of Wednesday.
Here are some expectations from Finance Minister Jaitley’s budget for 2017-18:
1. Income Tax slabs and rates may see favourable change as demonetisation and GST will play key roles this fiscal. As a fallout of demonetisation, consumer spending is expected to be low so a relaxation in tax slab structures may be on the cards. Rationalisation of tax structure is also expected keeping in mind the disruption caused by GST.
2. Steps to reduce ambiguity and multiplicity of regulations in transport sector to bring clarity to the industry and boost the transport industry, particularly with the surge of business due to start-ups taking over the market. This will make it easier for consumers to avail app-aggregated cab/shuttle services like Uber and Ola while also encouraging startups to expand in the market.
3. For the e-commerce market, particularly, major businesses have demanded clarity of FDI in B2C e-commerce through automatic route. Last year, the government allowed FDI into B2C e-commerce but disallowed the marketplaces like Flipkart and Snapdeal to offer discounts to consumers thus ending the discount wars. Though consumers enjoyed the discount wars, brick and mortar stores claimed they suffered hugely due to such business tactics.
4. Clear roadmap on further pushing the country on the path to digital payments and encouraging the move from cash-based to less-cash or digital economy, in keeping with the larger Digital India plans.
5. Boost to Start up India programme with a slew of measures to make the startup ecosystem more robust including possible widening of the tax free period from 3 years to 5 years and quicker clearances along with easier tax regulations in relation to matters like Employee Stock Ownership.
6. The country is fast moving from desktop to handheld devices and smartphones are improving in their penetration and ease of use. That highlights the prominence mobile banking takes in our lives. Quick adaptation by a large chunk of the population, though sudden and to some degree forced, to mobile banking and e-wallets was one of the saving graces during demonetisation and making smartphones more affordable and promoting cheaper data services will be a key expectation. Affordable mobile handset or consumer durable items of a certain price limit may be given concessions on duties.
7. SOPs and tax rebates to encourage and boost e-payments will be expected for achieving financial inclusion. Also, as banks saw a surge of cash flow into the banking system after demonetisation, investments in advanced technological infrastructure of banking systems will help in seamless digital transactions.
8. The government will need to revive capital expenditure. For that a calibrated approach is paramount towards GST. The elections in states may also lead the government to announce a populist budget.
9. Basic tax exemption limit is expected to be increased . For financial security purposes, various sections have heavily lobbied for National Pension Scheme which may be converted from an EET to EEE based programme and the finance minister will be expected to address the issue.
10. The Housing for All plan has been one of the main promises of the government and this budget may announce measures to boost low cost housing, cheaper home loans, tax rebates limits to be increased from ₹50 lakh to benefit middle income groups as much of the houses in metropolises range beyond that price point.
11. Boost for agricultural sector with measure like cheaper fertilisers, better irrigation infrastructure, interconnectivity of rivers and cheaper seeds will be expected, especially given the fact that farmers suffered a torrid time after demonetisation. The educations sector is also expected to get large investments, with particular focus on the PM’s Beti Bachao Beti Padhao campaign.
12. Steps to improve India’s ranking in ease of doing business scale. In the past year, a major part of the foreign investment left India’s shores. Jaitley’s promise to reduce corporate tax in four phases to 25 percent along with delay in GST rollout will increase expectations from the government which plans to turn India into a manufacturing hub.
13. Plans like Make in India and Skill India are expected to see huge investment to boost India’s prospects as an international business powerhouse. It will also help in pushing India’s infrastructure goals ahead at a much faster pace especially for roads, highways, ports and railways.
14. Promise of assured electricity, not cheaper electricity, is expected this year and major investment in solar power may be on the cards given the fact the Prime Minister Narendra Modi has laid down his intent to expand India’s solar power capacity to 100 GW by 2022.
The government will want to put the country back on the high growth path. So, improving customer confidence and consumer spending will be vital as well. So expect this budget to be more of an appeaser.