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Budget 2016 Live: Jaitley's has delivered his economic mantra, a year we will know how good it was

What is making his task particularly difficult is the fact the Narendra Modi government is going through a rough patch due to the heightening criticism over the rising intolerance. The JNU imbroglio and the Rohith Vemula suicide only aggravated the problem.

Rajesh Pandathil February 29, 2016 15:13:12 IST
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Budget 2016 Live: Jaitley's has delivered his economic mantra, a year we will know how good it was

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Feb 29, 2016 - 15:12 (IST)

Final word

So what's the final word on the Budget 2016-17? It's too early for that. But it can be said that it's more of a political budget, careful not to ruffle feathers. It plays safe by trying to please all sections. The super-rich would be a bit unhappy, but it won't bother the government much. Jaitley's Budget eschews adventurism and is populist without being overtly so. Finally, everything comes down to to implementation. One would have preferred to hear the FM addressing the topic of farmers with more emphasis though. 

Feb 29, 2016 - 13:33 (IST)

Social security

Firstpost senior editor Akshaya Mishra says: It's heartening that the government is giving attention to social security or the safety net. It's not spoken of as much in India as in western countries but it's critical to any economy preparing for structural changes - from farming to manufacturing to services - and the consequent financial and social disruption caused by them. We are still a long way to go. But the thinking is in the right direction.

The opposition isn't happy with the Budget. Of course, that is almost ritual by now. What comes through in Jaitley's Budget is the good intent. But good intent needs to translate into good implementation on ground. But the basic question remains: will the government be able to achieve what it has promised without overstepping the fiscal red line it has drawn for itself by a big margin? It seems to be a tough ask.  

Feb 29, 2016 - 13:13 (IST)

Budget positive for bond markets

Ramesh Damani, market expert: We live in a world that hates uncertainty. India adheres to the path of fiscal prudence and sticks to the path that is good for India. Borrowing figure is lower than last year will be taken postively by bond markets. 

Ashok Wadhwa, CEO, Ambit Holdings: He has announced an amnesty scheme. Historically amnesy scheme can collect 0.2 and 0.8 percent. On the personal side, thankfully not brought the long-term capital gains tax. 10 pecent more tax for those who earn 10 lakhs. Overall, a decently balanced budget from tax perspective

Feb 29, 2016 - 13:09 (IST)

Budget scores politically, but numbers bear scrutiny

@TheJaggi says: On balance, the budget presented by Arun Jaitley is probably his best so far. Politically, it is the right direction, and economically it is difficult to fault spending on infrastructure and rural areas.

The middle taxpaying class should not be unhappy even without a raise in the tax-exempt limit in general, but lowest bracket gets a small Rs 3,000 relief.

If the tax amnesty schemes generate large resources, the numbers will add up, but not if they fail.

If the incentives to the organised sector enable more companies to expand employee base, it will benefit the neo middle classes the most - jobs at the bottom end of the strucuture, that pay under Rs 25,000 per month.

The fiscal devil in the fine print will, however,  need closer scrutiny.

Broadly, this budget sends a political message from Narendra Modi that the NDA is about the poor and not the rich. This is the first shot in his 2019 election campaign.


 

Feb 29, 2016 - 13:07 (IST)

Flexible FRBM surprises everyone

Firstpost executive editor Ajay Singh says: Arun Jaitley’s insistence to maintain flexibility in the FRBM would come as a surprise for those who thought that the minister would adhere to targeted figure of fiscal deficit. His decision to review the functioning of the FRBM appears to be an outcome of the government’s view to divert more funds for social expenditure. This is an important decision as the government would have additional fund to play with on its social commitments.

Feb 29, 2016 - 13:04 (IST)

Feb 29, 2016 - 13:04 (IST)

Jaitley avoids rural distress in Delhi's backyard

Firstpost executive editor Ajay Singh says: Just as union finance minister Arun Jaitley began painting an optimistic picture of the India economy against odds of downturn of the global economy, he has cautiously avoided the mentioning of the rural distress in Delhi backyard-Uttar Pradesh.

There were unmistakable signs that in the budget-making of this year, the lurking shadow of the UP election to be held next year guided the economic policies. Having lost Bihar elections, Jaitley was not oblivious to the fact that in the rural dominated Uttar Pradesh, the party’s support base of 2014 has been gradually slipping away.

Barely two hundred kilomteres away from Delhi, there have been reports of famine deaths in Bundlekhand on account of successive failure of crops. The entire region has been reeling under severe economic distress which is unprecedented. The similar situation persists in West UP and Eastern parts of the state. Jaitley’s emphasis on rural sector seems to be an attempt to win over a large section of the rural populace which seems to have alienated from the Centre and the state government in equal measures.

Feb 29, 2016 - 13:01 (IST)

BJP shedding urban bias

Firstpost senior editor Akshaya Mishra says: The BJP is shedding its urban bias. Its economic policy, as reflected in Jaitley's announcements so far, would disappoint many economists looking for drastic reforms. Right now it's an UPA budget, minus the in your face populist spending. It could be the pressure of politics. But there's nothing to complain about.

Feb 29, 2016 - 12:43 (IST)

BJP shedding urban bias

Firstpost senior editor Akshaya Mishra says: The BJP is shedding its urban bias. Its economic policy, as reflected in Jaitley's announcements so far, would disappoint many economists looking for drastic reforms. Right now it's an UPA budget, minus the in your face populist spending. It could be the pressure of politics. But there's nothing to complain about.

Feb 29, 2016 - 12:42 (IST)

The Union Budget 2016 is a tightrope walk for Arun Jaitley, the lawyer-turned-politician in Prime Minister Narendra Modi's cabinet. On the one side is the need to increase public spending to support a still-struggling economy and the other side is the need to stick to the fiscal consolidation path.

Budget 2016 Live Jaitleys has delivered his economic mantra a year we will know how good it was

Union Finance Minister Arun Jaitley. PIB

Above all is Jaitley's own personal need to prove his skills in handling the finance ministry and the broader economy. The fact is in the last two years at the North Block, Jaitley has been able to attract a significant amount of criticism for mishandling of key issues, including bank recapitalisation.

What is making his task particularly difficult is the fact the Narendra Modi government is going through a rough patch due to the heightening criticism over the rising intolerance. The JNU imbroglio and the Rohith Vemula suicide only aggravated the problem.

Above all this is the two consecutive years of monsoon deficiency, which has pushed the rural economy into a crisis. There is wide expectation that the government will increase the expenditure for various social sector schemes to support the farming community. This is likely to put a drag on the government's ability to spend for projects.

The there is the high expectations from the difficult-to-please salaried class on tax front.

Here are a few figures to watch out for:

Fiscal deficit: It is the shortfall in the government's revenues to meet its expenditure. The budget gives out the revised estimate of the deficit for the previous financial year and also the estimate for the next. The number is expressed both in absolute terms and as a percent of GDP. As per the fiscal consolidation roadmap, for the current financial year the deficit has been pegged at 3.9 percent, 2016-17 at 3.5 percent and 2017-18 at 3 percent. Will Jaitley stick to this?

Market borrowing: The government bridges the fiscal gap through market borrowing by issuing borrowing. Gross market borrowing for the current financial year was Rs 6 lakh crore. The higher the deficit the higher the borrowing and the government's interest expenses.

Plan and non-plan expenditure: Plan expenditure pertains to public spending that comes as part of the current five-year plan. As opposed to this, the non-plan expenditure deals with interest payments, subsidies, defence spending, salaries to government staff, grants to state governments and Union Territories, loans etc. Jaitley had cut the plan expenditure for the current financial year by more than Rs 8,000 crore from the previous year. While cutting non-plan expenditure at a time of rural distress may be politically bad, will he cut the plan expenditure again? That will have direct correlation to the public spending, which is key to industrial recovery. The non-plan expenditure for the current financial year stands at Rs 13.12 lakh crore and plan expenditure at Rs 4.65 lakh crore.

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