No ‘Poll-Pulist’ Schemes and Carrots
FM focuses on rural economy, infra growth, digitisation & expanding revenue base
every Indian, but also to those who look to invest here.
The present government has taken very seriously the task of cleaning up the political funding system. The introduction of an innovative Electoral Bond scheme under the RBI and reducing cash contributions from .₹ 20,000 to .₹ 2,000 are commendable moves towards this objective.
Sharing data from its recent demonitisation drive, the finance minister revealed that there has been a tax revenue increase of 17% over the last year.
In fact, the FM went to the extent of showcasing his database by quoting a plethora of statistics gained from data analytics.
One must also applaud the government’s manifold attempts to widen the tax base, whether it be through data to discern areas of tax evasion or through creating an environment that fosters compliance.
While larger companies are likely to be a bit disappointed that the corporate tax rate has been left untouched, the silver lining is that there are no adverse implications for corporates from the Budget. It is very clear that the government has left no stone unturned to power all engines of the economy to revive demand.
Bringing the affordable housing sector under infrastructure status, will definitely provide a much-needed fillip to the housing sector which has been reeling under the impact of demonetisation.
The real estate sector, which contributes close to 8.5% of GDP and remains the highest employer amongst BPL families, remains a major gainer as long-term capital gains have been cut to two years. Along with its focus on infrastructure development, this is expected to have a multiplier effect and aid in GDP growth. SMEs, which account for 96% of registered companies, have sufficient cause for cheer as their tax burden has been reduced. This move is laudable as the sector accounts for significant employment and is a critical lever of the economy.
It is hardly surprising that the Budget sticks to its earlier path of fiscal prudence with a targeted fiscal deficit of 3.2% whilst balancing enhanced spending in social sector.
This is particularly important in the long term and for correcting inflation, especially in the face of rising US rates.
Over and above that, there is no denying that digitisation can have the single greatest transformational effect in increasing transparency and curbing corruption.
Overall, I congratulate the finance minister on delivering a budget which avoids pandering to populist expectations while maintaining its keen focus on boosting rural economy, infrastructure growth for long-term asset creation, promoting digitisation and expanding the revenue base.