union budget 2017 it says let’s continue life the way we live 2017-18-analysis/union budget... ·...

Cover Story

8 industrial economist february 2017

For years IE has been lamenting over the incredibly small percentage of population filing income tax returns and fewer still paying personal income tax. It is something sad: for a population of 126 crore, just a little over a crore should pay income tax. We have also been contrasting this with the visible signs of prosperity in

terms of the boom in the sales of automobiles, housing property, foreign travel, etc. We have been suggesting progressive targeting to take IT payees to at least 30 per cent of the population over three years.

let’s continue life the way we live

Union BUdget 2017

it says

S Viswanathan

industrial economist february 2017 9

cover story

A tax non-compliance society...We are happy over the emphasis made by Finance Minister Arun Jaitley on expanding the income tax base and correspondingly correct-ing the very low tax-GDP ratio. Look his graphic description:

• Asagainstestimated4.2crorepersonsen-gaged in organised sector employment, the number of individuals filing return for salary incomeareonly1.74crore.

• Asagainst5.6croreinformalsectorindividualenterprises and firms doing small business in India, the number of returns filed by this category is only 1.81 crore.

• Outofthe13.94lakhcompaniesregisteredinIndiaupto31March2014,5.97lakhcompa-nies have filed their returns for Assessment Year2016-17.Ofthese,asmanyas2.76lakhcompanies have shown losses or zero income. 2.85lakhcompanieshaveshownprofitbeforetax of less than Rs 1 crore.

• Only7781companieshaveprofitbeforetaxofmore than Rs 10 crore.

• Amongthe3.7croreindividualswhofiledthetaxreturnsin2015-16,99lakhshowincomebelowtheexemptionlimitofRs2.5lakhp.a.,1.95croreshowincomebetweenRs2.5lakhandRs5lakh,52lakhshowincomebetweenRs5lakhandRs10lakhandonly24lakhpeople show income above Rs 10 lakh.

• Ofthe76lakhindividualassesseeswhode-clareincomeaboveRs5lakh,56lakhareinthe salaried class.

• ThenumberofpeopleshowingincomemorethanRs50lakhintheentirecountryisonly1.72 lakh. We can contrast this with the fact that in the last five years, more than 1.25 crore cars have been sold and number of Indian citizens who flew abroad, either for business or tourism, was 2 crore in 2015.

From these figures we can conclude that we are a tax non-compliant society. The predomi-nance of cash in the economy makes it possible for people to evade their taxes. When too many people evade taxes, the burden of their share falls on those who are honest and compliant.

A wonderful data analytics!

Eradicating black money...The NDA government has been attempting to eradicate the menace of black money. Demonetisation is among the efforts continued in this direction. Digital technology now available, would help in keeping track of the oldRs500andRs1000notesdepositedinto

banks. The Finance Minister referred to around 18 lakh such deposits showing unusually large amounts: “deposits of more than Rs 80 lakh were madein1.48lakhaccountswithaveragedepositsize of Rs 3.31 crore. Such large deposits will be scrutinised.” The Finance Minister expressed the hope that this mine of data will help expand the tax net as well as increase the revenues.

Revenues buoyant and deficit to targetJaitley has the reason to feel happy over fiscal performance through the current year that helped conformtothefiscaldeficittargetedat3.5percent of GDP. The bonanza of low crude and pe-troleum product prices and the prudent upward revision of excise duties on products, helped record a huge jump in excise duty collections, of aroundRs99,000crore,overthepreviousyear.Due to sluggish growth in manufacturing, esti-mate of corporation tax, customs and service tax growth has been modest but income tax revenue isestimatedtogrowaroundahealthy25percent.

Highlights of President Pranab Mukherjee’s address to both

Houses of Parliament on the first day of Budget Session 2017

To combat the evils of black money, corruption and terrorfinancing, the government demonetised 500, 1000 notes`

Resilience demonstrated by our countrymen, particularly the poor,in the fight against black money and corruption is remarkable

Close to 13 crore poor have been covered under various socialsecurity schemes

Over 20 lakh youth have benefited from the PM Kaushal Vikas Yojna

By the end of 2017, all meter gauge tracks in the north-easternstates will be converted to broad gauge

Decisive steps taken to give a fitting reply to the repeated incursionson our territorial sovereignty

Forces successfully conducted surgical strike to prevent infiltrationby terrorists

Constructive debate is welcome to hold Lok Sabha and Assemblypolls together

Ratifying of Paris agreement is a strong message of India’scommitment to combating climate change

Implementation of the 7th Pay Commission has benefited 50 lakhemployees and 35 lakh pensioners KBK Infographics

My government hastaken bold decisions inthe interest of the poor

let’s continue life the way we live

Cover Story


The survey presents the economists’ perception of how the country has performed and how it intends to head forward.

BUDGET

STORYin pictures...without comment

Union Budget 2017-18 HighlightsBUDGET2017-18

Fiscal Deficit estimated at 3.2% for 2017-18 and 3% for 2018-19

Current Account Deficit stood at 0.3% in the first half of 2016-17

Customs and excise duties lowered for renewable energy sector

Foreign Investment Promotion Board to be phased out

Limit of cash donations to political partiesbrought down to 2000`

Senior citizens guaranteed to get 8% return aspension for 10 years under a new LIC scheme

No service charge on IRCTC Ticket booking

Total Expenditure estimated at 21.47 lakh crores`

Defence expenditure pegged at 2.74 lakh croresexcluding pension

`

` 1.31 lakh crores for Railways; 3,500 kms new lines to be laid

` 10 lakh crore credit target for agriculturalsector during 2017-18

Major thrust on digitisation; cash transactionsover 3 lakh not to be allowed`

FDI Investments in the first half of 2016-17touched 1.45 lakh crores`

Income tax on annual income of 2.5 lakhs to 5 Lakhs reducedfrom 10% to 5%

` `

Income tax surcharge of 10% on annual income of 50 lakhsto 1 crore

`

`

MSMEs with turnover less than 50 crores will pay 5% less tax;effective rate to be 25%

`

KBK graphicsInfo

%

GDP GrowthConstant Prices

5.66.6

7.2 7.6

2012-13

2013-14

2014-15

2015-16*

2016-17**

Ec

onom

ic

2016-17

2017-18

*Provisional

**1st Advance Estimates

Expe

cted

Ran

ge

7.1

6.75-

7.5

KBK Infographics

***Provisional1st Advance Estimates

'13-14 '14-15 '15-16 '16-17

4.2

1.2*

4.1**

-0.2

GDP GrowthAt Constant Prices

KBK InfographicsSource: Economic Survey 2016-17

Agriculture,Forestry & Fishing

Services

Fiscal Deficit(Per Cent of GDP)

*Budget Estimates

State of the Indian Economy

'13-14 '14-15 '15-16 '16-17

4.53.9 3.5*4.1

'13-14 '14-15 '15-16 '16-17 '17-18

7.2 7.1*7.66.6

6.75-7.5**

*Provisional1st Advance Estimates**

Exp

ect

ed

InflationCPI Headline

WPI Headline

Ec

onomic

2016-17

IndustrialGrowth



'13-14 '14-15 '15-16 '16-17

5.0

7.4*

5.2**5.9

'13-14 '14-15 '15-16 '16-17

Growth Rate of GVA at Basic Prices

Growth Rate of GVAat Basic Prices

Growth Rate of GVA at Basic Prices

2015-16 2016-17

Q1 Q2 Q3 Q4 Q1 Q2 Q3*

5.13.7

-2.33.4

*Provisional

7.88.9*

8.8**10.3

Economic Survey 2016-17The concept of Universal Basic Income (UBI) can be analternative to the various social welfare schemes in an effortto reduce poverty

Adverse impact of demonetisation on GDP growth will betransitional

Gross Domestic Product (GDP) growth in 2016-17 to dipto around 6.5%, down from 7.6% in last fiscal

Economic growth to rebound to 6.75 to 7.5% in 2017-18

Fiscal windfall expected from Pradhan MantriGarib Kalyan Yojana and low oil prices

Farm sector to grow at 4.1% in thecurrent fiscal, up from 1.2% in 2015-16

Fiscal gains from Goods and ServicesTax (GST) will take time to realise

Growth rate of industrial sector estimated tomoderate at 5.2% in 2016-17 from 7.4% last fiscal

The current account deficit narrowed inthe first half of 2016-17 to 0.3% of GDP KBK Infographics

Highlights

So is there one number that tells us whether we have done well or not. That number is the growth in the GDP, an indicator of the wealth created during the year.

But is GDP the polestar for the economy. For sure, “no.” How then does the economy stack up.

A quick listing of the key budget numbers to understand which way the country is planned to go.


cover story

201620162016

201720172017

3

4

5

6

7

8

1

2

Rupee goes to

Union Budget 2017-18

KBK graphicsInfo

Borrowings and

Other Liabilities: 19p

1

Corporation Tax: 19p2

Income Tax: 16p3

Customs: 9p4

Union Excise Duties: 14p5

Service Tax & Other Taxes: 10p6

Non-Tax Revenue: 10p7

Non-Debt Capital Receipts: 3p8

Rupee comes from

Source: Budget 2017-18 documents

Rupee

goes to

Rupee

comes

from

1

2

34

5

6

7 1

2

3

456

7

8

Centrally Sponsored Scheme: 10p

Other Expenditure: 13p

Defence: 9p

Subsidies: 10p

Finance Commission and

Other Transfers: 5p

States' Share of Taxes

& Duties: 24p

Central Sector Scheme: 11p

Interest Payments: 18p

8

BUDGET2017-18

11,95,025

5,95,748

17,90,783

7,25,114

10,65,669

17,90,783

3,42,736

2,10,982

5,32,791

91,132

15,15,771

6,30,964

21,46,735

9,45,078

12,01,657

21,46,735

3,21,163

1,25,813

5,46,532

23,454

2015-16Actuals

2016-17Budget

Estimates

2016-17Revised

Estimates

2017-18

Budget

Estimates

Budget Snapshot

KBK graphicsInfoSource: Budget 2017-18 documents

(Figures in crore)`

BUDGET2017-18

Key Numbers

Revenue Receipts

Capital Receipts

Total Receipts

Scheme Expenditure

Other than Scheme

Expenditure

Total Expenditure

Revenue Deficit

Effective

Revenue Deficit

Fiscal Deficit

Primary Deficit

13,77,022

6,01,038

19,78,060

8,01,966

11,76,094

19,78,060

3,54,015

1,87,175

5,33,904

41,234

14,23,562

5,90,845

20,14,407

8,69,847

11,44,560

20,14,407

3,10,998

1,39,526

5,34,274

51,205

KBK graphicsInfo

Gross Tax Revenue Income Tax

Service taxUnion Excise DutiesCustoms

2016-17 (Budget Estimates)

Source: Budget 2017-18 documents

Corporation Tax

2016-17 (Revised Estimates)

2017-18 (Budget Estimates)

`crore

2015-16 (Actuals)

2,8

7,6

37

4,5

3,2

28

3,5

3,1

74

4,9

3,9

24

3,5

3,1

74

4,9

3,9

23

4,4

1,2

55

5,3

8,7

45

2,1

0,3

38

2,3

0,0

00

2,1

7,0

00

2,4

5,0

00

2,8

8,0

73

2,1

1,4

14

3,1

8,6

69

2,3

1,0

00

3,8

7,3

69

2,4

7,5

00

4,0

6,9

00

2,7

5,0

00

14,5

5,6

48

16,3

0,8

88

17,0

3,2

43

19,1

1,5

79

Tax CollectionBUDGET2017-18

Budget Impact

KBK graphicsInfo

BUDGET2017-18 A look at what is dearer and what is more

affordable after the Union Budget

Cheaper Costlier� Online rail tickets � Cigarettes and

tobacco products

� LED lamps

� Cashew nuts

� Aluminum products

� Optical fibres

� Silver coins

� Mobile phones

� Water purifiers

� Liquified Natural Gas

� Solar panels

� Clean energy generating systems

� Leather products

� Cashless transaction devices

� Group insurance for Defence services

KBK graphicsInfo

Deficit Trends BUDGET2017-18

2013-14

2014'15

*Revised Estimates **Budget Estimates

2015-'16

As per cent of GDP

2017-'18**

2016-'17*

4.44.1

3.93.5 3.23.1

2.92.5

2.11.9

0.1

0.91.1

0.70.3

2.0 1.91.5

0.9 0.7

Revenue

Primary

Fiscal

Effective Revenue

Key numbers that you should know

How we are going wrong

Look at it closely for deep insight!

Who is giving us the money

Who is affected by the budget

Cover Story


Disinvestment receives focus... Yet another matter for satisfaction relates to disinvestment. The NDA I government under Vajpayee made a mark in phasing out a number of public sector undertakings that were not viable or incurring losses. Disinvestment suffered during UPA I. It didn’t recover much under UPA II. The Modi government, with its comfortable majority in the Lok Sabha, has been endeavouring to return to this plan. The NITI Aayog has recommended the closure of several sick PSUs and also to privatise a few others. The Finance Minister pointed to the plan to list the five public sector general insurance companies. Under SEBI norms these well-established and profit-making companies are poised to off load 26 per cent of equity. This would mean a big surge in revenues of these well-established profit-making companies.

Jaitley said the listing of public sector enterprises will foster greater public accountability and unlock the true value of these. He pointed to a revised mechanism and procedure to ensure time-bound listing of identified CPSEs on stock exchanges. The sharesofrailwayPSEslikeIRCTC,IRFCandIRCONwillbelisted, he said.

There are bright prospects for such disinvest-ment of public sector banks and several other profit-making PSUs as well. FromRs45,000croreexpectedinthecurrent

fiscal, a big step up to Rs 72,000 crore has been targetted for disinvestment in 2017-18.

SME companies receive tax reliefThe Finance Minister has stepped up invest-ments substantially in the agriculture and rural sectors, infrastructure, education and skills de-velopment and on several other social welfare projects.

This comfort has also enabled him to provide substantial relief to small and medium enterpris-es. In his previous budget Jaitley announced the formation of the MUDRA Bank to assist SMEs. Continuing with this and appreciating the huge employment and production provided by these enterprises, the budget offers a reduction in cor-porate tax.

There is sound logic in this: “SMEs do not get many exemptions. They end up paying more taxes as compared to large companies. As per dataofFinancialYear2015-16,2.85lakhcom-panies making profit of less than Rs 1 crore, paid effectivetaxrateof30.26percentwhile298com-paniesmakingprofitaboveofRs500crore,paideffectivetaxrateof25.90percent,”Jaitelypoint-ed out. And so, the Finance Minister proposed to reduce the income tax for SME companies with annualturnoveruptoRs50croreto25percent.Thiswouldbenefit96percentofregisteredcom-panies.

The budget also acknowledged a strong de-mand for abolition of minimum alternate tax. In order to allow companies to use MAT credit in future years, the budget proposed to allow carry forwardofMATupto15years.

Thrust on surface transport...The merger of the railway budget into the general budget seems to have been done with ease. “The focus is on building an effective multi modal lo-gistics and transport sector that would make the economy more competitive,” said the Finance Minister.ThebudgetprovidesRs241,387croreforthetransportationsector.Ofthesetherail-ways will account for Rs 131,000 crore. Passenger safety will receive special attention through the creation of a special agency with a corpus of Rs 1 lakh crore over the next five years. New railway linesof3500kmaretobecommissionednextyear. Combined with the sizeable expansion of highways and road network, inland waterways and port development, surface transport is poised for well-integrated development. Likewise, se-lect airports are to be taken up for operation and maintenance in the PPP mode.

The FInance MInISTer has proposed to merge the public sec-toroilcompanies(ONGC,IndianOil,HPCL,BPCL...)tocreateamega corporation.

This will be valued around $100 billion, double that of Re-liance Industries. At this size, it can rank with major global corporations and can have enormous clout in acquiring oil busi-nesses across the globe as also to negotiate the best terms in the oil market.

There had been a few attempts in the past, but they were not overtly successful.

S V S Raghavan, who headed with distinction State Trading Corporation and MMTC, attempted a merger of these two . He planned to develop counter-trade business on the lines of Japa-nese sogasoshas like Summitomo to buy and sell goods across nations. The combined entity was named Bharat Business Inter-nationalLtd.(BBIL).Withthechangeingovernmentin1991,andwith the different focus on globalisation and liberalisation, this concept was given up.

Later, Air-India was merged with Indian Airlines. Sadly, years later the merged entity is still mired in huge losses: it is still bat-tling with the homogenisation of the two different work cultures, systems, employee compensation...

For the new concept also, homogenising the work cultures, systems and disciplines of the oil explorer and producer, the re-finer and the marketeer could pose serious challenges. Inthepost-1973oilcrisis,internationaloilmajorsovertookthe

traditional auto giants and reached the top of the global corporate table. The mega merger proposed will push India in global corpo-rate rankings.

A mega corporation for India’s oil sector

Cover Story


Long LIngerIng concernS on the economy relate to the falling rate of investment; rising stock of public debt and consequent debt servic-ing which increasingly eats up the revenues, leaving less for investment; the ever growing pro-portion of NPA to total loans in the banking sector is another drag in the economy.

The Economic Survey acknowledged that demonetisation led to a temporary slowdown in GDP as cash-intensive sectors such as agri-culture, real estate and jewelry were affected more than others. Further, because of the rising uncertainty, firms and households postponed investment decisions, aside from cutting con-sumption, which is 60 per cent of GDP. The Survey revised downwards the official growth rate for 2016-17 to 7.1 per cent.

For 2017-18 also the growth rate is revised downwards:itwillbeintherangeof6.75percentto7.5percent.TheIMFforecastis7.2percent.

Fiscal deficit...The Survey asserts that countercyclical measures (fiscal deficits during recession and fiscal surplus ingoodtimes)adoptedbyadvancednationsarenot applicable to India and the focus should be on containing debt. It is not clear whether because of RBI’s advice against bigger fiscal deficit in the wake of rising oil price and high inflationary potential, the Survey shifted gears from deficit to public debt.

Banking woes...Thenon-performingloansorassets(NPA)ofbanks are 12 per cent of gross advances. The Survey urges to solve the problem since “the consequent squeeze of banks has led them to slow credit growth to crucial sectors-especially to industry and medium and small scale enterprises.”

The Survey suggests a centralized Public Sector Asset Reha-bilitation Agency (PARA)tolookatthe “largest, most dif-ficult cases, and make politically tough decisions to reduce debt.”

Regional inequality... The Survey points out that state or regional dis-persion continues to be striking unlike China. Although India as whole performed well during 2004-14,somestateshavelagged.Thustherehasbeen a lack of convergence. There are two sets of economic indicators: income and consumption, and health/demographic indicators. Convergence means that a state that starts off at low perfor-mance levels on an outcome of importance, say the level of income or consumption, should grow relatively faster over time, improving its perfor-mance, so that it catches up with states which had better starting points.

Referring to convergence in real per capita GDP during2004-14,theSurveysaysthatwhilein-comes converged for provinces in China, incomes diverged for states in India. The same trend of divergence is observed in the case of convergence in real per capita consumption for states in India. Thus, despite rapid growth on average “there is a sign of growing regional in-

EcOnOmic

SURvEY

Dr T.K. JAYARAMAN

So rIch, So comprehenSIve...

Professor Jayaraman teaches at

Fiji National University.


cover story

UnreStrAIned debtS...

equality among the Indian states.” This needs to be addressed early.

Inflation contained...The Survey observes inflation is likely to be well be-lowtheReserveBankofIndia’stargetof5percentinthe current fiscal thanks to demonetization. Since credit growth has been poor, the Survey indicates room for an easy money policy. In the same breath, the Survey notes the low oil price environment of last few years would not be repeated in 2017. Onwholesale-pricefront,areversaltrendwas

observedfromatroughofnegative5.1percentinAugust2015to3.4percentattheendofDecember2016 due to rising crude prices. There is possibility of “sharp rise in prices in 2017-18 that may narrow the scope for monetary easing .”

Acche Din Ayenge In the wake of “the most destructive tsunami of monetization,” the Survey offers some solace to thepoorbywayofaUniversalBasicIncome(UBI).However, it points out to a “number of implementa-tion challenges: it should not become an add on to the current anti-poverty and social programs.”

For Long Ie has been cautioning on the unrestrained in-creaseinpublicdebtfrom1980.Thiseatsincreasingamountsof revenue through debt servicing - interest payments and re-payment of a portion of debt.

Public debt has ballooned from a few thousand crores of rupeesin1980toclosetoRs69lakhcroretoday.TheBudgetestimatesborrowingofRs5.35lakhcroretobridgethegap between expenditure and receipts. This means higher cost of debt servicing. India, well - poised to become the FIFTH LARGESTECONOMYnextyearshouldaddressthisweakas-pect of its fiscal picture.

Per Cent of GDP

2013-

14

2014-

15

2015-

16

2016-

17*

*Budget Estimates

Fiscal Deficit

KBK InfographicsEco

nom

ic

2016-17

4.53.9

3.5

4.1

InflationCPI Headline

WPI Headline

Eco

nom

ic

2016-17

KBK Infographics

2015-16 2016-17

Q1 Q2 Q3 Q4 Q1 Q2 Q3*

*Provisional

5.1

%3.9

5.3

5.3

5.7 5.23.7

-2.3

-4.6

-2.3

-0.8

1.4

3.8

3.4

2015-'16

KBK graphicsInfo

ResourcesTransferredto States BUDGET

2017-18

Revised Estimates

` Crore

9.57%

8,3

4,4

83

9,9

0,3

11

10

,85

,07

5

9,3

0,6

74

2016-'17

2016-'17

2017-'18

Actuals

Budget Estimates

BE BERE

BE

RE

Welcome electoral reform...The budget has proposed a much needed electoral reform. The budget attempts greater transparency in electoral funding: in accordance with the sug-gestion made by the Election Commission, the maximum amount of cash donation a political party can receive from one person will be Rs 2000. The budget also proposed to the Reserve Bank of India to enable the issuance of electoral bonds. Under this scheme a donor can purchase bonds from authorised banks against cheque and digital payments. These shall be redeemable only in the designated account of a registered political party within a prescribed time limit. The budget also proposes that every political party should file its return within the time prescribed.

Tax relief at the lowest slab...Without conceding the persistent demand for rais-ing the income tax threshold, the Finance Minister

has proposed a relief to indi-vidual assessees in the lowest bracket: a reduction in the exist-ing rate of taxation for income fromRs2.5lakhtoRs5lakhto5percentfromthepresentrateof 10 per cent. If the limit of Rs 1.5lakhunderSection80Cforinvestment was used fully, tax could be zero for people with incomeuptoRs4.5lakh.

To make good some of the revenue loss (estimated at Rs 15,500crore)theFinanceMin-ister has proposed a surcharge of 10 per cent of tax payable on individuals whose annual tax-ableincomeisbetweenRs50lakh and Rs 1 crore. WiththeOppositionparties

disrupting Parliament in the previous session, there was the apprehension of these parties blocking the presentation of

the budget. There was an attempt by the Congress floor leader seeking a postponement of the budget to pass the condolence resolution for the demise of former MP, E Ahamed. The Lok Sabha Speaker would not concede this. It should go to the credit of the MPs in allowing the Finance Minister to presentthebudget.Onehopestheensuingdis-cussions would be likewise healthy.

The government has reason to feel happy over the significant progress made by the infrastructure sector, notably power and the growth recorded despite the hiccups on demonetisation. Yet a lot more needs to be done in stimulating investments, expanding manufacturing and exports and in meeting the vastly changed global environment. n

Cover Story


BUDGET

2017-18

S Viswanathan

the many welcome departures...

The budget for 2017-18 has several unique features. We list a few of these:

1 The budget was presented for the first time on 1 February 2017, a month ahead of the practice so far of presenting the budget on the last working day of February. In the earlier practice, the parliament will go for a recessafter15March,re-conveneinearlyApriland vote on account for the demand from different ministries through April. After discussions and amendments, if any, the budget would be passed in May.

In this system the first quarter of the financial year would witness ad hoc modest investments. The second quarter, the monsoon season for most parts of the country, would impact revenue and expenditure; thus these are kept at modest levels. The momentum will pick up in the third quarter and peak in the fourth and final quarter. Several departments will struggle to spend the budgeted allocation even leading to lapses or in manipulations or carry forward. The whole exercise thus suffers from uneven revenue and expenditure through the four quarters.

In the new changed system, the budget for the year would be passed in the current year itself and thus the actual receipts and expenditure couldbeginfromDayOneofthenewfinancialyear and thus would be rational.

2 There was no separate budget for the railways. Again this is a departure from the practice of pre-senting a separate railway budget over the last nine decades. This has given flexibility for the fi-nance minister to address the requirements of the transport sector in a holistic manner. The finance minister could look at the total needs of the surface transport sector in an integrated manner.

3 For the railways there is a saving of around Rs9500croreaspaymentofdividendtotheCentralexchequer.

4 With elections for five state assemblies announced for March-April there was the problem of announcing special schemes. Political parties in opposition could cry foul over any proposal of concession or relief on grounds of impacting voting pattern.

5 The Prime Minister in his address on 31 December 2016 had announced several new schemes relating to agriculture and other sectors. These are normal-ly the domain of the finance minister. These have, to some extent, pre-empted the budget proposals and also beat the announcement of the election schedule. A cleaver ploy indeed.

6 Instead of computing the revised esti-mates of the budget of 2016-17 at the end of three quarters, these had to be done on the basis of the figures available for two quarters. With the traditional bunching of expenditure and revenues in the closing weeks of the year, this change would deny the government getting a more precise revised estimate.

7 States have not crystalised their plan to advance their budgets. The computations of their perfor-mance and aligning these to the Union budget would pose some challenges.

8 A silver lining is the announcement by the finance minister on introduc-ing the GST from 1 July. The Centre has conceded most of the demands of the states for ensuring this. This single measure is expected to bring about substantial improvements in tax reforms and revenue admin-istration.

9 Thebudgethasusedthedataonbankdepositsafter demonetisation to sharpen efforts to expand the tax base.

union budget 2017 it says let’s continue life the way we live 2017-18-analysis/union budget... ·...

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