New Delhi [India], Feb. 3 : The Budget for the fiscal year 2017-18 comes in the backdrop of few significant changes and reforms taking place in the country, including demonetisation of the high-end currency notes since November 2016 and the anticipation built around the upcoming Goods and Service Tax (GST) Bill in April 2017.
Union Finance Minister Arun Jaitley, who on February 1 presented the Budget, has been wending his way to establish the rationale behind the proposals made, while also paving the roadmap to the development in the coming years.
Addressing a meet of different representatives of industry chambers - CII, ASSOCHAM and FICCI among others, Jaitley said they needed to have fiscal prudence and in order to maintain its path, the quality of fiscal deficit was very important.
"The government has now been in office for a little over two years and eight months. And we have had the opportunity of presenting four Union Budgets. If you look at the changes that have come about, the Budget is no longer considered an exercise to tinker with duties.
They have actually become policy documents, which guide the direction in which the country is to move," Jaitley said.
"Each decision that we have taken can actually be called a reform in its own right. And what is more important is nor a single decision that we have taken was contrary to the larger roadmap that we are trying to follow," he added.
Explaining the government's move of merging the Railway Budget into the Union's, Jaitley said this decision was dictated by a good reasoning.
"Each of the three changes that we made this year was dictated by a good reasoning. Presenting a separate Railway Budget was an exercise undertaken since 1924, a year in which the size of the Railway Budget was much bigger than the size of the Union Budget.
Railways would be treated as any other infrastructure and service industry, which also requires to be improved, invested in, and made more competitive," he said.
Jaitley also made a point about advancing the Budget to February 1 from the usual February 28. "There was nothing sacrosanct about the 28th of February. Earlier, the timing was 5.00 pm because it was linked with the GMT and we continued the practice for about 50 years.
The timing was advanced because you wanted the expenditure to be in Q1 rather in Q3," he said. Jaitley added, "The total approach towards this year's Budget was this year was a needle to improve the overall spending, fully conscious of the fact that the spending will come through the government and that the spending is necessary to spur growth and create an enviroment in which eventually the private sector will also pick up." Jaitley said there was no need of modifying the excise duty or service rates in view of the GST bill to be implemented in April.
"In the coming months, we'll have the GST. So, for the few months, we didn't see any reasoning in modifying the excise duty or service rates," he said.
Hoping that the GST would help in curbing black money, Jaitley said, "Our steps against shadow economy would continue.
That's why we put this cap of Rs. 3 lakh on cash transactions. No tax refunds have been held, but I have not cut any expenditure at the same time. Hopefully, when the GST is implemented the scope of generating black money itself becomes more difficult." "There were several issues in terms of policy in relation to the draft GST legislations.
My target is to finalise those drafts and take them in the second part of budget session of Parliament," he added.
Questions have been raised on the Budget regarding the absence of any caps that would increase opportunity for employment for the youth.
But Arvind Subramaniam, Chief Economic Advisor, begs to differ. "The first precondition for job creation is growth in investments. We have to have to targetted policies for sectors which have the tendency to produce more number of jobs.
In June last year, there was package for Apparels and made-ups, which have seen a push this year. The logic is these are low skilled-labour intensive sectors. The third sector is contruction. The fourth component is keeping in view the good monsoon that we have had the allocation under NREGA has been increased," Subramaniam said.
Earlier, offering a blueprint for the upcoming years, Jaitley had said the Budget was aimed at enhancing the spending in the 'successful stories' of the previous years and encashing on their development.
"Our weakness is in the private sector. Banks are still struggling. In order to keep up with this, I needed to spend more. Now, in order to spend more, do I just need to increase the schemes? Or spend more on the areas that have yielded better results in the past few years? Hence, the first area that deserved spending was rural agriculture.
So, I do a large part of spending there - in irrigation, roads, rural housing, farm sector insurance. The second area - keep continuously increasing spending in the social sector," he said. "The third area - in a big way, concentrate on the infrastructure, out of which Rs. 2.5 lakh crore have been given to transportation. So, you enable movement in the nation. In railways, out of the Rs. 1,31,000 crore, the budget is giving Rs. 55,000 crore to it. Now, that puts a question on Railways itself but, it was a necissity since railways is a very importarnt part of our life.
So, telecom, highways, ports, smart cities, rural roads - these are all success stories that are emerging and I had to build up on these stories," he added.
Jaitley had also said the government has gone hard against tax evaders and people who make a mockery of the Indian legal and financial system.
On February 1, presenting the General Budget proposals for 2017-18 in Parliament, Jaitley said the major thrust of his fourth budget is on stimulating growth, relief to middle class, affordable housing, curbing black money, promoting digital economy, transparency of political funding and simplification of tax administration.
Jaitley also outlined the government's overarching agenda: 'Transform, Energise and Clean India'. The government's emphasis will be on implementing all these proposals for the benefit of the farmers, the poor and the under privileged sections of the society, the finance minister said.