The goal of garibi mukt Bharat is at the core of the Union budget 2017/2018. Finance Minister Arun Jaitley’s fourth budget attempts to ensure that the fruits of economic progress are distributed equitably amongst all sections of society.
The global economy is facing serious challenges and most developed nations are in the throes of economic crises. The economic uncertainty in the US, Brexit and movements within multilateral trade platforms are some of the game-changers that can alter the global economic landscape. The world over, communities that were neglected are questioning existing economic paradigms. Globalisation is no longer considered empowering and nations have started looking inwards. Economic growth based on transnational services and international migration is witnessing a reversal and the global investment climate is not warm. The Indian economy and the Union budget could not have remained immune to these factors. Global trends had to be taken into account while deciding the direction of the Indian economy. The budget has done so in a commendable manner.
The most important aspect of the budget is that it pegged the fiscal deficit at 3.2 per cent of the GDP. The FM has set a target to keep the fiscal deficit 3.2 per cent — and not 3 per cent — to provide for “higher public expenditure in the context of sluggish private sector investment and slow growth”. He has wisely preferred fiscal prudence and maintained discipline — an extraordinary step that even political adversaries have appreciated. The government has thus sent the right signals — of a stable policy environment — to both domestic and international players and boosted the confidence of overseas investors.
The budget has also addressed the impact of demonetisation and the GST roll out. Without follow-up measures, the objectives of demonetisation will not be achieved. In the war on black money, bringing the informal sector into formal processes and plugging the sources of black money generation are important. Budget 2017 has initiated steps in this regard.
The thrust given to the farm sector has ensured that agricultural growth does not lose momentum and maintains the 4.1 per cent level. Farmers will have ease access to credit. The outlay for agriculture has been increased by 24 per cent in the fiscal year 2017/2018. A special support of Rs 1,900 crore has been announced to bring cooperative banks into the ambit of the core banking structure. A micro-irrigation fund and a dairy development fund will be set up under NABARD with a corpus of Rs 5,000 crore and Rs 8,000 crore respectively. The move is expected to make credit easily available to small and marginal farmers.
The allocation for the government’s flagship crop insurance scheme, Pradhan Mantri Fasal Bima Yojana (PMFBY), has been raised to Rs 9,000 crore from Rs 5,500 crore. The government will also take measures to bring 40 per cent of the net cropped area under insurance. It has also urged the states to delist perishables such as vegetables and fruits from the Agriculture Produce Marketing Committees (APMCs) and allow farmers to sell such items directly to consumers, to realise better prices.
Employment generation is another of the budget’s focus areas. Rs 48,000 crore has been allocated to the rural job creation scheme, MGNREGA, the highest ever; this has the potential to lift one crore rural households out of poverty. Another significant proposal is the expansion of the Skill India Mission, with the objective of harnessing India’s demographic dividend. The budget has announced the setting up of 100 Pradhan Mantri Kaushal Kendras in 600 more districts, which will impart foreign language training to youth seeking employment outside the country. In order to financially empower women, Mahila Shakti Kendras will be set up in rural areas for skill development, with a corpus of Rs 500 crore.
Infrastructure has received a massive boost, with an allocation of Rs 3,96,135 crore. The railways has received its largest ever allocation of Rs 1.31 trillion, an 8.26 per cent increase over the last fiscal. A railway safety fund of Rs 1 trillion has also been announced. The Indian Railways will list its subsidiaries — the Indian Railway Catering and Tourism Corporation, Indian Railway Finance Corporation and Ircon International Ltd. — in stock exchanges to give them an opportunity to grow in a competitive market and simultaneously access investments from international markets.
The allocation of Rs 67,000 crore for national highways substantially exceeds last year’s outlay of Rs 57,676 crore. Connectivity will be improved by constructing 2,000 km of coastal roads. Rs 19,000 crore has been allocated to the Pradhan Mantri Gram Sadak Yojana. The government’s mission on affordable housing has been given the status of an infrastructure project; this will draw more investment, helping builders to access capital from financial markets. The interest burden will fall, leading to a boom in construction of affordable homes.
Perhaps the most unique aspect of the Union budget 2017-18 is that, for the first time, the political establishment has been held accountable for black money generation. By proposing a ceiling of Rs 2,000 on cash donations to political parties, the government has effectively pinched a major source of unaccounted wealth. Introducing electoral bonds is a pathbreaking initiative. The cap of Rs 3 lakh on cash transactions further takes forward the agenda of a cashless and corruption-free economy.
The tax breaks to the MSME sector and the salaried class is expected to drive growth by making more cash available in the economy. More people will be brought into the tax net, thereby making the economy more organised. The budget has balanced the goals of growth and equitable development.