The U.S.-India Business Council (USIBC) commended the 2017 Union Budget presented by Finance Minister Arun Jaitley, saying the budget has a forward-looking outlook and builds off the economic reforms enacted over the last three years of Prime Minister Modi’s government. USIBC feels that the budget deepens the Government’s move towards a digital economy, while remaining committed to attracting foreign investment, increasing infrastructure spending in roads and civil aviation, rationalizing the tax structure, spurring domestic growth while also bringing in rural India into the fold of the digital economy.
USIBC has commended the noteworthy reform measures that have been implemented in the last year including the passage of the Goods and Services Tax (GST), the bankruptcy code, FDIs in several sectors of the economy, and measures for financial inclusion. In light of these reforms, the Council was pleased to note that the budget is a fiscally sound agenda that doubles down on Prime Minister Modi’s stated goals of improving the ease of doing business by reducing red tape, investing in “Skill India”, and attempts to mitigate the negative impact of demonetization.
USIBC President, Dr. Mukesh Aghi said, “At a time of global uncertainty, budgets can be challenging to implement but the Finance Minister has done an admirable job in creating a vision that will propel the domestic economy while remaining cognizant about foreign investors. The industry welcomes positive steps in the affordable housing segment, bringing the ‘Housing for All’ scheme a step closer to reality. Relaxation on long term capital gains and infrastructure status to the segment will boost supply in the market. The Council looks forward to more announcements on liberalization in certain sectors in the near-term.”
Rajiv Khanna, President of India-America Chamber of Commerce described it as a well-balanced budget. “It is a well thought out and a well balanced budget. The fact that the Indian stock market has reacted so positively to the budget speaks for itself”, said Mr. Khanna.
Ron Somers, founder and CEO of India First Group also commended the budget. “I am in complete agreement with Finance Minister Arun Jaitley: when you look around the world today and witness all the retrenchment and chaos underway from Russia to China to Brazil, India stands out as a beacon of stability and predictability,” said Somers.
Karun Rishi, President of USA-India Chamber of Commerce (USAIC) described it as a well-balanced, fiscally cautious budget in the right direction.
The Indian Panorama invited readers to comment on the Indian Union Budget. Most felt it was a soft budget which did not hurt common people much, may be because of the impeding elections in a couple of important state assemblies. Whatever, the consensus was that it was an unexciting, lackluster budget. Here are their comments.
Dr. VK Raju, an eminent eye surgeon based in Morgantown, WV says: “India has had 25 finance ministers since independence in 1947 that have presented and passed in Parliament 83 budgets- both interim and annual so far. Mrs. Indira Gandhi from Indian National Congress, as the Prime Minister of India was the only woman to hold the Finance Portfolio (1970-71). Her critics used to call her “the only man in Indian Cabinet.”
Since our Independence in 1967, we have few islands of excellence in many fields, yet the India we all dream about is far from reality.
The budget can undoubtedly give a shot in the arm to our economy, but consider these:
- The human resource is the ultimate resource of a nation.
- Water and sanitation are still major problems.
- Investment in human development is more productive than investment in physical assets and moreover, it leads to a faster rate of national growth.
- Malnutrition in children and 23% of middle school girls dropping out of school because of feminine hygiene issues.
India is a highly developed country with developing country problems. In the west, poverty is relative and in India it is absolute poverty.
Finally see what the great statesman, Nani Palkhivala said, “To my countrymen, who gave unto themselves the constitution but not the ability to keep it. Who inherited a resplendent heritage but not the wisdom to cherish it, who suffer and endure in patience without the perception of their potential. I say, Change the mindset, sky is the limit for India.”
George Abraham, a former Chief Technology Officer at the United Nations and Chairman of INOC (USA) made the following comment.
“I could not bring myself commenting on this budget without mentioning the way Modi Government’s unprecedented rush for submission on the day when one of its longest serving members of Lok Sabha and former Union minister Shri. E. George Abraham Ahamed has passed away. I am saddened by the fact that his memory has been dishonored!
At the outset, I would like to agree with many observers that the budget has some positive elements such as tax deduction for lower-income earners. However, the budget has done very little for the middle class, farmers, daily laborers, self-employed or small and medium businesses who are hit hard by the reckless demonetization policy of this Government. The budget is also appeared to be rushed through for narrow political benefits with an eye on the upcoming state elections.
At this point in time, the economic fundamentals are on a downward trend with fall in demand and fall in consumption with job losses in millions. While the GDP forecast is downgraded to be a percent or lower, there are no new bold initiatives for job creation or very few incentives to promote investment.
Obviously, there is so much emphasis on digitization while not referencing the fact that there are 18,000 villages in India are still without electricity and 47 percent of the population lack any access to a bank account and the Internet is unavailable in the remote areas of the country.
Although the Union budget has made an attempt to deal with political contributions, there would be little accountability without laying a solid groundwork for transparency, disclosures, and penalty.
Finally, though the Prime Minister has characterized MGNREGA as a ‘living monument,’ of Congress failure, the Finance Minister gave it a nudge by allocating 699 crores more than the previous year. It is a clear admission that the MGNREGA is so vital to the rural households across the land, and it would be suicidal for the Modi Government to scuttle it.
In summary, the budget failed either to address the current hardships the lower echelon of the society is facing due to demonetization or putting up bold reforms for incentivizing investment or job creation.”
Anu Jain, a Finance analyst had this to say. “Indian Finance Minister Arun Jaitley has presented the Union Budget for the year 2017-18. It was the first budget in the history of independent India to be presented on February 1
This is his fourth annual budget and the first budget after demonetization. The Union Budget 2017 was broadly focused on 10 broad themes.
They are – Farmers, Rural Population, Youth, Poor and Health Care for the Underprivileged; Infrastructure; Financial Sector for Stronger Institutions; Speedy Accountability; Public Services; Prudent Fiscal Management; Tax Administration for the honest.
“The impact on growth from the governments cash crackdown would wear off soon and called 2017 budget is for the poor”, said Mr. Jaitley. Yet, while vowing prudent fiscal management, Arun Jaitley also raised his 2017-18 federal deficit targets to 3.2 percent of gross domestic product to cover his spending promises. Jaitley said, “As we all see that India as “an engine of global growth” but we should remember risks to its outlook from likely U.S. interest rate hikes rising oil prices and signs that globalization is in retreat”. PM Narendra Modi’s surprise decision last November to scrap high-value banknotes worth 86 percent of India’s cash in circulation has hit consumer demand, disrupted supply chains and hurt capital investments. The worst of the cash crunch is now over. Manufacturing survey showed that business was slowly returning to normal. Still, the finance ministry forecasts that growth could dip to as low as 6.5 percent in the current fiscal year till March, before picking up slightly in the coming fiscal year to between 6.75 and 7.5 percent.
The Income Tax rates have been slashed and that’s certainly a reason for everyone to cheer. Those earning up to Rs 3 lakhs per annum will now be completely exempted from paying tax. Individuals earning between Rs 3 lakhs and Rs 5 lakhs per annum will get a 5% benefit as the tax rate has been slashed from 10% to 5%. Also, people earning higher than Rs 5 lakhs per annum are also eligible for the 5% reduction in income tax and businesses with turnovers of no more than Rs 50 crore get a tax break. This all is healthy to trigger the economy and help everyone especially the middle class and small business.
Government targets to bring almost one crore households out of poverty by 2019. The budget proposes to complete 1 crore houses for those without homes.
Budget has raised the allocation for the “Mahatma Gandhi National Rural Employment Guarantee Act” (MGNREGA) to an all-time high from Rs 37,000 crore to Rs 48,000 crore. This is big hike, and was the highest ever allocation to rural India.
Budget also highlighted that the participation of women in MGNREGA is increased to 55 per cent. In the budget, there is allocation for linking Aadhar to various bank accounts and to health cards for senior citizens. After announcing demonetization, Modi government has been promoting linking of Aadhar numbers to bank accounts and also claims credit for systematization as Aadhar registrations grow.
Railway e-tickets: In a move to encourage the use of services, service tax on railway tickets booked electronically have been pulled back. Currently, a service charge of Rs 20 is levied for sleeper class and Rs 40 for all air conditioned classes per ticket while booking tickets on the IRCTC website.
The continuing theme of attacking black money was evident in the move to ban all cash transactions of over Rs 3 lakh and the attempt to clean up political funding. Parties will now have to disclose the identities of those donating over Rs 2,000, though electoral bonds will be introduced to allow anonymity for clean donors. The government has lined up more incentives for startups. Profit linked deduction will be allowed for three years out of seven instead of three years out of five.
But there is negative impact of budget on LED Lights, Tobacco, Mobile phones etc.
The 2017 India budget looks all round development budget, aimed to take India to growth path, while focusing on helping low and middle income group people including farmers and village folk, the poor and youth – while not unusual, became even more necessary because of the criticism that demonetization had hurt the informal sector and the rural economy. It is first budget which include railway budget too projecting an overall growth of more than 7%.”
Indu Jaiswal, a senior community leaders said: “I think the new budget proposed for 2017 by Mr. Jaitley will definitely benefit the country. Specially encouraging digital payment, transactions at fuel pumps, hospitals and railway stations will help in eliminating cash handling. As we are progressing in the right direction these proposals for upgrading the financial transactions system will help.
We must include all areas of business specially healthcare. Together we will continue to make a difference.
Ashok Ojha, a senior journalist and a promoter of Hindi language in the US opined that the budget might determine the course of movement of Indian economy but doesn’t necessarily reflect the condition of its entire people.
“The presentation of annual budget in the Indian Parliament is a democratic ritual that is supposed to accelerate the growth of Indian economy, which is on upward path since the past decade. The Modi Government has made a wide range of tax concessions aimed at directly assisting the middle class working man save some money every year. In addition to helping the middle class city dweller the annual budget of India also targeted farmers who produce the food for the nation. Helping farmers with varieties of crop loans and insurance policies may go a long way making the farming community prosperous and the country self-sufficient in agriculture.
My sister called me from her village in Buxar district of Bihar. Two decades ago her village lacked even the basic electricity to light her home. She boldly invited me to visit her home where all rooms were fitted with heater and air-conditioning. She said her family agriculture business helped her save enough money to install comfortable living and now we feel that ‘Our living is no less comfortable than that of city dwellers’.
The farming community in India is no doubt prospering, however, the budget failed to take stock of the debt that the rural economy is carrying on its soldiers. We don’t know if the budget is able to protect a debt struck farmer from taking the extreme step of committing suicide.
The budget allocates two months interest free credit for farmers and many other insurance plans. It is hoped that rural India will receive funding to improve crop yield and provide employment to rural population.
The budget might determine the course of movement of Indian economy but doesn’t necessarily reflect the condition of its entire people. Indian boasts of its huge workforce of young people within the age range of 20 to 35, who continue to look for job and with every passing year ejected from various jobs that subscribe age limit for employment. During the past few years the job growth remained very dismal. The education system failed to improve and address the demands of the 21st century. In its new budget proposals the Modi Government promised to set up one hundred skill development centers while institutions of higher education, especially in states like Bihar, continue to be out of tune with the new demands and challenges of 21st century.
The government plans to improve employment opportunities by teaching foreign languages for young people, however, improving the quality of education for Indian languages are on back burners. Of course, the prime minister promised to pay $6,000 for every pregnant woman in rural India, however, hospitals continue to charge hefty amount from patients with serious illnesses. In USA a patient death is the failure of the hospital, in India, it is a normal situation that enables hospital authorities collect their dues before the dead is released for last rites. India seems to become insensitive to rail accidents. One hears stories of rail accidents almost every month. There is no way to know if the provision of Rs. 1,31,000 crores in the national budget will be wisely used to upgrade the system.
I returned to USA after a month-long trip to India, where ATM machines fail to eschew cash, two months after the much hated demonetization of high value Indian currencies. A story goes like this: A Western tourist exchanged his dollar bills into Indian rupees in 500 and 1000 denominations. The same day government of India ordered these currencies invalid. The tourist was visiting India for 40 days. He spent rest of his time in India returning his rupees bills of 500 and 1000 by queuing outside of banks. There are many stories that tell the story of negative impact of demonetization but the government ignored to talk about it in its budget.
The government push to make the country cash less is a dangerous one. The whole world deals in cash, especially for small transactions. If you are forced to get a credit card and use for purchases, you are destined to be drowned in heavy debt very soon. This is the true saga of middle class in developed economies including USA. Indian government promotes the cash less economy that would bring misery over its middle class, the same people who are responsible for improving the Indian economy to more than seven percent growth rate. There is no sign Modi government is capable to force the big industrialist mend their ways of working. Barring a few, no major case of corruption has been unearthed, except the arrests of individuals, who were caught carrying a few lakhs of currencies.
Travelling from Delhi airport to my home in Dwarka I met a number of young people who had left their villages in far flung areas of Bihar and Odisha to drive taxis for living. These young people work for companies like Uber and Ola. Some of them plan to go back to their native village where they would appear for collage examinations. I bet these young people, who are without a pull in Delhi, are destined to continue driving taxis even after they would graduate from colleges.
I travelled to Jaipur to attend the annual literature festival. The festival didn’t charge entry fee for young people who came to listen to authors from all over the world. I could see hundreds of young people, who thronged the venue every afternoon to mingle with friends. I am sure these young people were trying to make a sense of their lives and figure out if there is a future for themselves should they decide to become writers.
During my month long trip to India I found that government offices including banks reverting to old days, when files used to move slowly. Officials talk about government guidelines that must be observed in order to ensure compliances. I visited a number of government offices and banks all of who were not busy working on their laptops. Wi-Fi was not functioning most of the time and many people continued to wait days and weeks for clearance of their files.
All government steps are geared towards winning elections. The ruling Bharatiya Janata Party is facing daunting challenges in five states immediately after the release of the budget. It is quite natural that the concessions declared in the national budget reflect its concern for the common man. How much gain the common man gets due to the new initiatives is something to see in coming months.”
The Indian Panorama will welcome comments on the subject from our wide awake readers.
