Union Finance Minister Arun Jaitley presented his fourth Budget 2017-18, that had a strong imprint of Prime Minister Narendra Modi’s road map for India’s growth strategy — cleanse political funding, rejuvenate the agricultural sector with an aim of achieving a growth of 4.1 per cent, ease the income tax and corporate tax, incentivise manufacturing, generate jobs, roll out welfare schemes for poor, youth, girls and promote cashless transaction. All this through the strategy of “Transform, Energise and Clean India.”
Jaitley did not go overboard to overhaul the corporate or individual income tax system, but maintained that the measures would boost the economy. It was a Budget that aimed to soothe the public who endured demonetisation. His proposals could influence the outcome in five upcoming Assembly elections.
Jaitley proposed a record target of `10 lakh crore for agriculture loans, while irrigation fund has been increased to `40,000 crore. Of the total Budget allocation of `21,47,000 crore for FY18, a record `1,87,200 crore was devoted to the rural sector – a 24 per cent rise. The rural employment scheme, MGNREGS, received `48,000 crore, up from `38,500 crore.
He also announced changes in electoral funding, ensuring political parties would receive no more than `2,000 in cash from an individual, and proposed a ban on cash transactions above `3 lakh. Later, Revenue Secretary Hasmukh Adhia clarified that cash transactions over `3 lakh would attract 100 per cent penalty.
With the Budget giving no tax concessions for large corporates and the rich, the Opposition would have little reason to criticise it. Corporate tax was reduced by five per cent for small businesses with less than `50 crore turnover, saying this could benefit up to 96 per cent of the country’s businessmen while big businesses would continue pay corporate tax at 30 per cent. Similarly, a 10 per cent surcharge has been slapped on well-off individuals earning above `50 lakh a year while those earning above `1 crore would continue to pay 15 per cent tax.
In a bid to bolster the business environment, and to encourage greater fund flows, Jaitley also announced abolition of the Foreign Investment Promotion Board (FIPB). Currently, nearly 90 per cent of the FDI comes through the automatic route, which does not require FIPB approval. Rural development expenditure is projected to go up by 11.8 per cent in FY18, compared to 27.4 per cent rise this year. The budget for education goes up 8.3 per cent, against 9.5 per cent in FY17.
He further pushed the strategy to bring the informal economy into the mainstream. The Mission Antyodaya effectively silences the Opposition charge that the Modi-led NDA government was favouring corporates. MGNREGS, Pradhan Mantri Gramin Awas Yojana, Pradhan Mantri Gram Sadak Yojana and the Swachh Bharat Abhiyan among others are top welfare schemes of NDA government. To stress it, he announced a 24 per cent jump in rural development programmes to `1.87 lakh crore in 2017-18.
Jaitley pledged to keep the fiscal deficit under control at 3.2 per cent of GDP in 2017-18. Revenue deficit was set to be reduced to 2.1 per cent from 2.3 per cent in the ongoing fiscal. Experts, however, are skeptical about the fiscal deficit target. “Can we stick to the 3.2 per cent target after GST? That is the big question,” said Suresh Babu, associate professor of economics at IIT Madras. For the seventh year in a row, the government failed to meet its disinvestment target.