Prof. A.N.Sadhu
The union Budget was presented to the Parliament on Feb.01,2017. The budget is usually supposed to dilate on three important aspects of the country’s financial management. At the first instance, it is supposed to reflect on the financial management of the previous year with respect to allocations made in the last budget, achievement of the targets fixed therein and difficulties encountered during the year in economic spheres. Secondly the budget lays out the plans for the ensuing financial year beginning on first of April. The third aspect of the budget is to outline the planning and policy for the future.
The annual budget is not an isolated exercise. It is prepared under the shadow of current economic scenario both at the national level as also at the global level. It also gets impacted by the important national and international events having direct or indirect bearing on the economic affairs of the country.
The budget just presented to the Parliament is special in many respects. It was presented after the country went through demonetisation which attracted different reactions from different quarters, favourable and unfavourable both. It was presented after a new regime assumed office in the U.S marking a clear shift in the settled American response to global issues. The budget is also a Mid term budget of the present government and it is also the first time, it has been presented on Feb.first instead of Feb. 28, as has been the usual practice.
As a result of demonitisation, one of its adverse impacts has been highlighted as contraction of money circulation in the economy which directly effects the small trade as also the small industry because most of its transactions are carried out in cash only. This obviously restricts the trade and business, on the one hand and the fuller operation of industrial activity on the other and thus narrowing down the scope for employment in these activities. The preparation of budget could not escape it and due attention had to be given to this aspect so that the demographic dividend is potentially harnessed. The scare of job squeeze was also enhanced because of the stand taken by Trump administration on immigration and his pronounced focus on America first. How will his policy initiatives shape in the days to come to make America great again will have a lot to do with world economic scenario particularly in so far as the job market is concerned. There is some evidence of shift of investible funds from India back to America and other advanced countries of the world, even though our FDI reserves are quite robust. The Finance Minister had also to present a progress report as also the path he would like to follow during rest of the term to see the government delivering at the grass root level, the promises made to the people.
The budget presented in this back drop is a skillful exercise of the Finance Ministry to make it presentable without meeting the expectations of the people in any substantial measure. One thing however shall have to be conceded that the budget has a development bias and how successfully the development goals are realized shall desend on a large number of factors.
The budget proposals have been presented, this time, in an unconventional way shifting from plan-non plan thrust to sectoral specific analysis, making it more exhaustive and elaborate and touching upon all sectors and sections of the economy. Starting from farmers, rural population, youth and under privileged, infrastructure, financial administration, digital economy, public service and good governance, fiscal management and tax administration, the budget has been presented as an exhaustive document to explain the governments thrust on inclusive economic and financial administration. If the things sail smoothly, there should exist a reasonable possibility of achieving- the targets and keeping the economy on wheels of growth in an un-interrupted manner ensuring a growth rate of 7 to 8 percent even when this year it will definitely get dented. Fiscal stability enabling the reduction of deficit to the desired level, will have to be pursued hard.
The honest tax payer has not been given justice and not much has been done to widen the tax base and rationalize the tax structure. The common man will find some relief in lower inflation rate, still a restricted money supply which will not give spurt to market prices and lower interest rates may enhance capability of the common man to venture into acquiring some assets.
High profile performance of agricultural sector shall heavily defend upon the benevolence of Rain God and general weather conditions during the year. Make in India has yet to pick up and non availability of sufficient jobs may cause unrest among the youth and deny the possibility of realizing the demographic dividend to which repeated references are made in high sounded words. While two and a half years are still left, the projected optimism will have to be translated from words into actions and solid results shown on ground.
The hope sustains life and so do we look forward for better days ahead.
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