Union Budget 2016-17
Infra & Rural focus will generate domestic demand
Hon’ble Finance Minister Shri Arun Jaitley presented his third Annual Budget 2016-17. With an eye on supporting the small tax-payer and the small investor, the Hon’ble Minister announced a number of schemes and small income tax exemptions. With a total plan outlay of Rs. 706248 crores, this year’s budget Fiscal deficit is targeted at 3.5% of GDP.
Further 100% FDI through FIPB route in marketing of food products and manufactured in India is an encouraging announcement for the food processing sector. Total proposed outlay on infrastructure in 2016-17 is Rs. 2,21,246 crore which will boost domestic demand and generate employment in the country. It is an optimistic and an inclusive budget majorly covering Rural India, Taxation, Agriculture and farmer’s welfare, social sector including healthcare, education skills and job creation, financial sector reforms, among others.
The Union Budget 2016-17 touched the ground and its focus on rural India would go a long way to generate demand in the economy and give a push to overall growth and development of the country. The nine pillars of Union Budget viz. Agriculture, rural sector, health sector, education skills and job creation, infrastructure and investments, financial sector reforms, governance and ease of business, fiscal discipline, and tax reform to reduce compliance burden are inspiring and will not only fuel economic growth but increase India’s competitiveness.
The additional exemption of Rs. 50,000 for housing loans up to Rs. 35 lakh, provided cost of house is not above Rs. 50 lakh will give a boost to the real estate sector. However, there should not be any cap on the price of house. It should be open-ended for the house buyers.
Allocation of over Rs. 87,000 crore for rural development is encouraging as it will increase farmers’ income in the coming times and fuel rural demand which is the need of the hour. Allocation of Rs. 38,500 crore for MGNREGA will facilitate employment generation in rural areas and will facilitate all-inclusive growth in the economy. Allocation of Rs 2.87 lakh crore to Gram Panchayats is highly appreciable as it will help in growth and development at the grassroots of villages. However, the supply side should also be focussed particularly availability of food items should be ensured as demand is going to increase in the rural segments in the coming times.
Focus on development of infrastructure through high allocation of Rs. 2,21,246 crore while capital expenditure of Rs. 2 lakh crore on railways and roads will lead to creation of state of the art infrastructure which is much needed for up scaling manufacturing growth and fuelling economic growth in the coming times. The medium term goal of the government to abolish permit-raj regime is inspiring as it will fasten clearances and facilitate ease of doing business. 100% FDI allowed in marketing of food produce manufactured and processed in India will give a boost to not only the Food Processing Industry but also Agriculture sector. It will give a push to Make in India initiative of the government.
The government’s decision to retain fiscal deficit at 3.9% in 2015-16 and target of 3.5% in 2016-17 despite burden due to 7th Pay Commission, shows government’s commitment to maintain fiscal prudence. The allocation of Rs. 25,000 crore towards recapitalization of Public Sector Banks is inspiring. However, the current state of banks desires more allocation of funds. The increase the turnover limit under Presumptive taxation scheme under section 44AD of the Income Tax Act to Rs. 2 crores is highly appreciable as it will bring big relief to a large number of assesses in the MSME category.
Source: PHD Chamber