The third union budget of Mr. Arun Jaitley and the 85th annual budget presented by the Finance Minister of India can be called growth oriented putting major thrust on Agriculture and infrastructure. It has cautiously deviated from Pro-Rich to Pro-Rural. The Finance Minister tried to maintain a balance between the staggering rural growth and high expectations of the corporate. There are lots of social reforms being proposed like massive mission to provide LPG connection to BPL households, a new health protection scheme, increased outlay for infrastructure, Rs.2.87 lakh crore Grant in Aid to Gram Panchayats and Municipalities and setting of 1500 Multi skill Training institutes throughout the country. From these proposals the intention of the Government is to move following the roadmap for fiscal consolidation projecting 3.5% of the GDP as fiscal deficit in the next year. Also, it has the burden to implement the 7th Central Pay Commission recommendations and the additional burden of Defense One Rank One Pay (OROP).
The decline in the credit growth reflected the slowdown in the growth in the balance sheet of the core industries resulting in the poor off take of credit by the industry from the Bank and risk aversion of Banks due to rise in NPA’s. The Finance Minister prioritizes his focus on rural economy, infrastructure spending, social welfare schemes and ‘Digital’ initiatives. He rationalized indirect tax and duty structures for various sectors such as IT Hardware, Defense, Minerals, Petrochemical and aviation Industries. In his speech he emphasized on the growth pillars of the Indian Economy i.e. Agriculture, Rural, Social sector, Skills Ease of Doing Business and Tax & Compliance reforms.
The rural India has been tried to get attracted by 3 major schemes to help the weaker sections like the ‘Pradhan Mantri Fasal Bima Yojana’ and the Health Insurance scheme which will protect one-third of India’s population against hospitalization expenditure. In the light of global economic situation, focus on rural economy is required. Expecting the encouraging performance of the Indian economy marked by lower inflation, high foreign exchange reserves, increase in tax revenues, manageable current account deficit and inflow in FDI in the coming fiscal year which will push the government with its ambitious plans of reforms in crucial areas like Banking, Infrastructure, Power, Taxation, etc.
In this year’s budget there were some disappointments as well as surprises including the implementation of the pay commission proposals remained unclear and it has made bold attempt at settling tax disputes by setting up dispute settlement bodies and introducing a presumptive taxation system. The ball is now in the court of RBI to reciprocate by easing liquidity through reducing interest rates to boost up the industrial sector and catalyze India’s economic growth.