Weightage to crucial areas of economy

Union Budget presented by Finance Minister Arun Jaitley has made history when the government decided to advance it to the beginning of February and merge the Railway budget with the general budget.

Union Budget presented by Finance Minister Arun Jaitley has made history when the government decided to advance it to the beginning of February and merge the Railway budget with the general budget.

The Budget reinforced the direction and principles of crucial areas of the economy. Fiscal prudence, expanded investment in infrastructure, reducing tax rates for small and medium industry and listing of Central public sector enterprises in a time bound manner, and the courageous move to abolish the Foreign Investment Promotion Board are some of these.
Some of the key positives that sends out the right signals are in the direct tax proposals. The proposal to slash tax rates of the small and medium industry by 5%, to 25%, will boost business in this sector which plays a crucial role in the economy both in value creation and jobs.

The proposal to give relief to the small individual tax payer will push consumption and help demand growth. While the FM highlighted the need to bring in the culture of tax discipline, the proposal to introduce a surcharge on income between `50 lakh and `1 crore is somewhat contrary to the welcome principle of honouring the honest. Proposals to increase capital outlay for infrastructure spend to `3,96,000 crore, the highest so far, with a comprehensive outlay for the entire transportation sector including the railways has great potential. What will need to be seen is how this money is spent, how it helps bring in private sector investments through PPP projects and how business models can be built around new concession agreements.

It is good to see the government getting its act together on listing of CPSEs, another way of partial privatisation. While this will help the government move out of some businesses which can be handled by the private sector, it will also lead to larger public holding in these firms.
In perhaps the boldest move to reform political funding, an extension of the government’s demonetisation drive will help bring in transparency and do away with corruption.

Naushad Forbes
President, CII

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