Manmohan Singh ‘worried’ after Union Budget, says fiscal arithmetic ‘faulty’

Indeed, a fiscal slippage of three percentage points in the current year over the target and a modest correction to reach a level of 3.3 per cent of GDP next year suggests that the damage that could have been caused by electoral imperatives has been minimised. The concession (as was strongly expected) in form of a standard deduction of Rs40,000 is mere eyewash as the FM has done away with the transport and medical reimbursements for salaried employees. Besides, Jaitley also proposed to introduce 10 per cent tax on distributed income by equity-mutual funds. Those ranged from electronics to edible oils and accessories. This was because the country is emerging from a slow-down triggered by the chaotic and disruptive implementation of the demonetization of banknotes 15 months ago and the new goods and services tax (GST) last summer. Also, with the dreaded long term capital gains tax (LTCG) being re-introduced, he ensured that the salaried can not complain of step-motherly treatment as any and every form of income of everyone would now be taxed.

Jaitley also announced a “major” investment to fund research infrastructure in the country to the tune of 1 lakh crore over the next four years.

Yadav, addressing reporters here, said Union Finance Minister Arun Jaitley, while proposing to increase the minimum support price (MSP) to 1.5 times the cost of crop production, had levied his own formula instead of going by the recommendations of the Swaminathan Commission report.

Apart from this, the food processing sector and dairy sector have received a massive boost, while the Kisan Credit Card facility has been extended to fisheries and animal husbandry sectors. “I propose to allocate a sum of Rs 500 crore for this goal”, said Jaitley.

In an unexpected move, Jaitley said the government would impose a 10 percent tax on any profits exceeding Rs. 100,000 from shares held for more than a year, without indexing.

But to fund these, he let go of the fiscal consolidation roadmap. But if we keep the politics of the budget aside and focus on the positives, they are welcome steps just as the stress on providing a better deal to senior citizens is an initiative that deserves praise. The budget has also reduced tax rate to 25% for companies with an annual turnover of up to Rs 250 crore.

Modi’s government on Thursday also raised the health budget by 11.5 per cent to $8.3 billion for 2018-19.

If the government slips again, the credibility to the Budget number will be lost.

Indian economy is now $ 2.5 trillion – seventh largest in the world. However, continuance of the dream of doubling farmer income even in the medium term continues.

Here are five key takeaways from Jaitley’s budget announcement for the coming fiscal year.

The Budget has rightly doubled the allocation on the Digital India program to enable combination of cyber and physical systems, which have the potential to transform the innovation ecosystem and the economy.

Gross market borrowing is seen at Rs 6.06 lakh crore and net borrowing at Rs 4.62 lakh crore in 2018.

Arvind Virmani, former chief economic advisor (CEA) to the Finance Ministry, believes a higher disinvestment goal in the next fiscal could have helped the government in making up for any shortfall in revenues from direct and indirect taxes and lowered the fiscal deficit target in the next fiscal.