Budget resembles to the elephant's plodding with lion's roaring

The union budget always puts you in a mixed reaction. It will never swamp you.  You will be able to gain something and lose some other things.  The political circle mainly the opposition forces will criticize with vituperative comments, but this budget presented by Jaitley scores a reasonable mark, which is also evident from the immediate surge in the share market.  Both Sensex and Nifty’s value swing up, which was not happening, at least in the past years.  The reduction in corporate surcharge and a deferral of the GAAR in all probability has helped the share market to come out a bit from the volatility  and its graph surged.  If you analyze this budget with a sharp eye for the details, you may find that many things are in the slough of futuristic growth. The only concern how the fiscal deficit is to be streamlined, which is the need of the hour.  Despite finance minister’s assurance to bring down this deficit in this year, he has now set a target of 3% of GDP in 2017-18. In fact, there will be a shortfall for the year 2015-16 also. Earlier, it was set to 3.6%, but now the same has been revised to 3.9%. This fiscal deficit will create a hindrance for growth of economic condition in the subsequent years.  In fact, the finance minister himself has expressed his deep concern about this fact and he has also said that a fiscal consolidation is a must

By reducing the expenditures alone drastically, one cannot expect the fiscal discipline.  One needs to augment the growth also. The growth rate anything below the level of 8% is not also advisable.  So, the best way is to monitor the expenditures and also the growth simultaneously and the review needs to be closely minuted and discussed for immediate remedial actions. If the revenue earning is not maintained at the level of budget’s expectation, the alternative expenditure plan must be ready to balance the situation of fiscal deficit.

There are many things adopted by the finance minister in this budget are laudable. He has announced a plethora of policies, one of which is the change in the  corporate tax rate to stimulate the investment. Jaitley has shown his inclination to speed up the infrastructure projects, mega power projects and in line with the railway budgets, he has also given a direction to speed up  the road projects. Through the setting up of National Investment and Infrastructure fund and the issuing of tax free infrastructure bonds will definitely fillip the growth. To implement all these policies, he has to now instruct  financial institutions to focus exclusively and extensively to propel the requirement of long term capital required by private sectors. As for indirect taxes, namely, adjustment in custom duties and increase in service tax is noteworthy policies announced by Jaitley.

Another significant aspect to monetize gold will delude people not to hold gold as an asset.  With the spiraling effect of increase in gold price and high inflation trend, gold becomes a hedge against inflation. The not so attractive return on bank deposits could have been acted as a disincentive to consider gold as an asset and hold the same.

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Jaitley has described the expenditures in details in the budget; of course, many are in line with the existing policies. The subsidies are not lowered to accrue the benefit derived from the reduction in oil prices.

Overall, Jaitley has attempted and proven him as a gallant finance manager to think for various goals need to be achieved. His anticipated goals are a higher rate of growth, increase in investment, wider safety net with a special emphasis and thrust on health insurance sectors. Though neither he is a savant in this field of economics nor he is a financial whiz-kid, but his first full fledged budget reflects the inherent desire of Modi to increase the economic growth of the country, reduce the fiscal deficit as early as possible and also to make provision through taxes to implement the slogan of Modinomics, namely “Make in India”, “Swachh Bharat” and “Retrieve the stash money”.

Overall, this budget is praiseworthy, but it is not explicitly clear how to achieve the target of fiscal deficit if the revenue growth is slackened. Because a high level of fiscal deficit will make government to cripple under the influence of growing debt and interest payment, which will be a nightmare for them and in that case, they have also to enlace themselves with the messy financial situation like the earlier UPA government.