The union budget 2017-18 was presented in the midst of great expectation of people as demonetization, stock market volatility, economy downtrend and GST have created so much of curiosity and anxiety among them. Expert felt that the budget 2017-2018 is a novel, reform oriented one and that pave the way for modern India.

In this budget analysis the fiscal deficit, taxation proposals, digitalization, support system extended to middle class, poor, high income group, small scale industries and corporate taxation were analysed and presented in a comprehensive format.

FISCAL DEFICIT:

The target of fiscal deficit of 3.2% was fixed in the budget with the consideration of income from demonetization that fetch approximately 15 lakh crore, higher income from direct taxes (up to 45% increase compared to the previous year) disinvestment of public sector units and increase of income from indirect taxes though the target of achieving 3.2% seems to be possible, it is totally depend upon the normal GDP growth. If the GDP grew as per government calculation (11.45%), 3.2% of fiscal deficit is possible. otherwise, the results would be in the negative side.

There is a reduction of net market borrowing to Rs3.48lakh crore which is significantly less than last year target of Rs4.25 lakh crore.

The revenue deficit is fixed at the rate of 1.9%

DIRECT TAXES AND INDIRECT TAXES:

In the Direct taxes, personal income tax plays a vital role as it would occupy huge chunk of income. In this aspect, government has reduced the tax percentage from 10% to 5% to the people who are earning income less than 5 lakh but the same time , the tax was increased to the people who earns more than 50 lakh to 1 crore

This balancing act would provide a comprehensive relief to the people as well as the government. With the information of larger group of people evading tax by using loopholes in the law, the government should have come with right proposal to bring them in to the tax net but unfortunately this budget did not have any information on this aspect

The structure of tax:

Table No 1- recent tax structure

Income ( Rs)	Tax rate
0 - 250000	Nil
250000 - 500000	5%
500000 - 1000000	20%
1000000 and above	30%

10% surcharge where income is between 50lakh to 1 crore

Less 3% + surcharge 15% of tax where income exceeds 1 crore

The tax proposal for housing is more encouraging as the holding period of long term capital asset tax has been reduced from existing 36 months to 24 months thus make the projects which are unsold for longer period to get some relief.

In the aspect of indirect taxes, much has not been said in the budget as GST is in pipeline which will address the concern about indirect tax structure.

The budget presented the optimistic outlook of achieving 11.75% of nominal GDP growth that obviously reflect higher receipt of income. The profit linked income tax deduction scheme facilitate to reducte the carpet area of 30 and 60 sq mtr to be counted. Furthet the corporate income tax rate has been reduce to 25% form 30%.

Somehow, the change of taxation system for corporate would increase their profit but their borrowing is not substantial because of instable business environment. Certain CBM should be initiated in the part of government to ignite growth thus leads to earn more profit by corporate. In addition with that GST is solution for all the problems as the surgical implementation of it would help us to manage the fiscal defict in the desired level and also the government will have certain legroom on investment of money for various projects.

ECONOMIC GROWTH:

As the economy is depends on the foreign direct investment, foreign portfolio investment, the efforts taken by the government in this area are loudable and appreciable one

India, a country which always been affected by red-tapism, retrospective taxation system as this phenomena was recently emerged when income tax authorities slapped the cases on Vodafone and other MNCs which created huge impact on transparency and soundness of the system

In order to allay the apprehensive of foreign companies, the government came with the following modifications

1. Scrapping of foreign investment promotion board from 2017-18

2. The sovereign wealth funds, multi lateral agencies, banks and large funds of category I and category II of foreign portfolio investors have now been moved out from retrospective taxation system

3. A simple process was introduced for FDI to register their application. In a nutshell, the efforts taken by the government to eliminate the barriers for foreign investors seems to have success but lot more initiative should be taken in this aspect to ensure long term growth of foreign investment

4. The increase of capital expenditure by 25.4%

The FDI is considered as core investment source for India’s economic growth. In those lines, the above mentioned efforts would not only enhance foreign investment but also strengthen our economy.

The issues of taxation on foreign companies arised because of certain differences on calculating taxes. In this regard, confusion, uncertainty and other issues should be solved with discussion at various levels to enable the FDI to invest without any hesitation.

DEMONETIZATION EFFECT:

As per the economists view, the GDP of the country will be slightly impacted by demonetization as they predicted that the impact will be between 0.5% to 0.75 % of GDP. But to offset this impact, the budget has following certain ingredients

· Higher infrastructure spending of Rs 96 lakh

· Higher tax collection of Rs 4.41 lakh

· Direct tax collection at Rs 9.79 lakh

· Money accumulated through demonetization

The above mentioned announcements, if achieved will ensure the adequate cash flow in the market that would definitely leads to growth of economy. So the effects of demonetization will be mitigated over the period of time

CASH LESS ECONOMY:

· Cash transactions above Rs 3 lakh banned. Penalty to be levied on defaulter

· Customs and excise duties on DOS card readers micro ATMs abolished

· Introduction of Bharath interface for money app (BHIM)

· Aim to increase the number of digital transactions to 2500 Crore in 2017-2018

· Allocation of Rs 10000 Crore for 2017-2018 for Bharath net project

· Quality of broad band set increased from 2 mbps to 20 mbps for all house hold

· Introduction of referral bonus scheme for individuals and Cash back schemen for merchants

· Aadhar pay to be launched.

· Target of more than 2500 crores transactions

· Addition of 10 laksh POS terminal within April 2017.

· Establishment of Payment Regulatory board by RBI.

The efforts related to cash less economy will be succeeded, if the government ensures better internet connectivity in Urban areas and rural India besides reducing the cyber crime by strengthening the protective mechanisms. Otherwise, the entire effort will go in vein.

FOR EMPLOYMENT:

· Establishment of skill centers under pradhan mantra kaushal vikash yojana (PMKUY)

· Promotion of ICT enabled education

· The condition of continuous holding of 51%of the voting rights has been relaxed

· Allocation of Rs 3016 crore to ministry of skill development and entrepreneurship.

Underlying principles of achieving nominal GDP of 11.75 in 2017-18. If the GDP growth is less than the achieving of fiscal deficit of 3.2% would be difficult one.

India is the country which formulates better policies but in the implementation side, we have to travel longer way as many important projects got failed because of this implementation failure. The above policies are good but the government should make effective mechanism to implement the announcements made in the budget.

AGRICULTURE:

· Establishment of National Agricultural market

· There is an increase of Dairy Development fund from Rs 3000 crore to Rs 8000 crore over the period of three years

· Allocation of Rs 10 lakh crore in the aspect of Agricultural credit.

· Under Fazal Bima Yojana, the cultivable area has been creased from 40% to 50%

· Setting of New mini Labs in KVK (Krishi Vigan Kendras)

The agriculture which comes under the category of primary sector, employes more than 50% of working population and most of them except some big farmers are struggling to earn considerable return on their product. The underlying reason is that the farmers are not getting adequate price for their products as middlemen looted their profits in a significant way. This can be solved by direct buying programme, through the Societies and other resources, the government has to buy all agricultural commodities and the payment has to be immediately paid to the farmers through author linked accounts.

CONCLUSION:

Though this budget is unique and novel compared to previous budgets in the dimensions of integration of Railway Budget, GST and Demonitization, the implementation is the key aspect. All the proposals of budget should be implemented in sprit to deliver the benefit of it to the common people otherwise, it will become and another budget as has presented in the previous period.

REFERENCES:

1) www.thehindu.com › Business › Budget “Highlights of Union Budget 2017-18”.

2) www.finmin.nic.in/budgetforbetterindia/index.html “Union Budget 2017”.

3) indiabudget.nic.in/ub2017-18/bh/bh1.pdf “Key Features of Budget 2017-2018 - Union Budget”.

4) www.pwc.in/budget/union-budget-2017.html “Union Budget 2017 analysis - PwC India”

5) www.hindustantimes.com/union-budget-2017 “Union Budget 2017 - Live updates, highlights, stories and analysis”

Received on 19.03.2017 Modified on 10.04.2017

Asian J. Management; 2017; 8(2):343-345.

DOI: 10.5958/2321-5763.2017.00051.8