Economic Development and Policies

Economic Survey 2016: A Mixed story of hope and dispair

The Economic Survey 2016-17 was tabled in Parliament on January 31. It was prepared by the finance ministry’s chief economic adviser Arvind Subramanian. The economic survey has presented a picture marked by both hope and despair. It has expressed some major concerns and suggested ways to overcome them. Among the measure concerns noted is slowdown in economic growth, employment growth, rising NPAs and dwindling fiscal situation. However, the economy still remains to be one of the fastest growing economies with price stability. Economic reforms are also underway and the government is sensitive towards the problems faced by the poor people.

India’s economic growth has been pegged at 6.5 per cent for the current fiscal, down from 7.6 per cent recorded in the last financial year, but is expected to rebound in the range of 6.75-7.5 per cent in 2017-18.  The Survey’s GDP growth figure for the current fiscal is lower than 7.1 per cent the Central Statistics Office had forecast earlier this month. Mr. Subramanian stressed that it wouldn’t be appropriate to compare the Survey’s forecast of “a quarter to half percentage point decline in growth” to projections made by other agencies, including the International Monetary Fund, which has scaled down its India growth estimate to 6.6%. After a temporary slowdown in GDP growth, the Survey expects the economy to return to normal, once the scrapped currency is replaced by March. In the long run, tax revenues and GDP growth would be bolstered on account of greater tax compliance and a reduction in real estate prices.

The Chief Economic Adviser termed the move to cancel the legal tender nature of high-value currency notes (demonetization) a “radical currency-cum-governance-cum-social engineering measure to permanently and punitively raise the cost of illicit and unaccounted transactions or kala dhan (black money).” Mr. Subramanian declined comment on the design and implementation of demonetisation, but did speak on the costs, and long term benefits of what was “an unusual and unique monetary experiment” aimed at a structural break. “It would be fair to say that short term costs include the hardships and inconvenience faced, particularly by those in the informal sector.”

Here are the highlights of the Economic Survey 2016-17 tabled in Parliament today:

  • GDP growth for next fiscal pegged at 6.75-7.5 per cent
  • Growth this fiscal to be 6.5 per cent
  • Farm sector to grow at 4.1 per cent this fiscal, up from 1.2 per cent last year
  • Growth rate of industrial sector to moderate to 5.2 per cent this fiscal, from 7.4 per cent last fiscal
  • Service sector is estimated to grow at 8.9 per cent in 2016/17
  • Demonetisation to affect growth rate by 0.25-0.5 per cent, but to have long-term benefits
  • Demonetisation may affect supplies of certain agricultural products like sugar, milk, potatoes and onions
  • CPI inflation seen around 4.5 to 5 per cent in 2016-17
  • Low inflation has taken hold, confidence in price stability has improved
  • Expect RBI to meet 5 per cent inflation target by March 2017
  • Prospect of lower oil prices over medium term likely to dampen inflationary expectations
  • Growth to return to normal as new currency comes in circulation
  • 2016-17 expected to be challenging from fiscal point of view; time is right for a review of medium-term fiscal framework
  • Subramanian says there is scope for easing monetary policy
Fiscal Situation
  • Implementation of wage hike, muted tax receipts to put pressure on fiscal deficit in 2017/18
  • 2015-16 fiscal deficit, seen at 3.9 per cent of GDP, seems achievable
  • As per the Economic Survey, there has been an improvement in the financial position of the States over the last few years. The average revenue deficit has been eliminated, while the average fiscal deficit was curbed to less than 3% of GSDP. The average debt to GSDP ratio has also fallen.
  • Need for fiscal prudence for both centre and states for fiscal health of the economy
  • The survey highlighted the need for fiscal prudence both by the Centre as well as the States in order to maintain overall fiscal health of the economy.
  • Survey says incentivizing the states for outstanding fiscal performance
  • Economic Survey 2016-17 elaborates that as the fiscal challenges mount for the states because of the Pay Commission recommendations, and mounting payments from the UDAY bonds, there is a need to review how fiscal performance can be kept on track.
Tax Policy
  • Income Tax net could be widened gradually by encompassing all high income earners
  • Proposes widening tax net from 5.5 per cent of earning individuals to more than 20 per cent
  • Tax revenue expected to be higher than budgeted levels in 2015-16
  • Favours review and phasing out of tax exemptions; easiest way to widen the tax base not to raise exemption thresholds
  • Tax administration could be improved to reduce discretion and improve accountability
  • Prescribes cut in individual I-T rates, real estate stamp duties
  • Time table for cutting corporate tax should be accelerated
  • GST, other structural reforms should take the trend growth rate to 8-10 per cent
  • Fiscal windfall likely from Pradhan Mantri Garib Kalyan Yojana, low oil price
  • Fiscal gains from GST will take time to realise
  • Efforts to collect taxes on disclosed and undisclosed wealth should not lead to tax harassment
  • Chief Economic Adviser says expenditure planning needs to be embedded in medium-term fiscal framework
Government Debt
  • Government debt to GDP ratio in 2016 seen at 68.5 per cent down from 69.1 per cent in 2015
Current Account
  • 2016/17 current account deficit seen around 1-1.5 per cent of GDP
  • Rupee’s value must be fair, avoid strengthening; fair value can be achieved through monetary relaxation
  • India needs to prepare itself for a major currency readjustment in Asia in wake of a similar adjustment in China
  • India needs to prepare itself for a major currency readjustment in Asia in wake of a similar adjustment in China
  • gradual depreciation can be allowed if capital inflows are weak
  • Universal Basic Income Scheme is an alternative to plethora of state subsidies for poverty alleviation.
  • Remonetisation will ensure that the cash squeeze is eliminated by April 2017
  • Supply of currency should follow actual demand and not be dictated by official estimate of desirable demand
  • Government windfall arising from unreturned notes should be deployed towards capital spending
  • While sounding a warning note on Centre’s digital push, the economic survey advocates a balanced approach towards a digital future. It advises banks to ‘facilitate not thwart interoperability.’
  • To tackle with the problems of increasing Non-Performing Assets (NPAs) of the banking system and declining credit and investment, the Economic Survey 2016-17 on Tuesday recommended a centralised Public Sector Asset Rehabilitation Agency (PARA) to look at the “largest, most difficult cases, and make politically tough decisions to reduce debt.”
  • As per the Survey, gross NPAs have climbed to almost 12 per cent of gross advances for public sector banks at end-September 2016. At this level, India’s NPA ratio is higher than any other major emerging market, with the exception of Russia.
  • Some debt repayment problems have been caused by diversion of funds. But the vast majority has been caused by unexpected changes in the economic environment after the Global Financial Crisis, which caused timetables, exchange rates, and growth rate assumptions to go seriously wrong
  • Chief Economic Adviser Calls for liquidity to be injected into the financial system
  • Estimated capital requirement for banks around 1.8 trillion rupees by 2018-19
  • Proposes to make 700 billion rupees available via budgetary allocations during current and succeeding years in banks
  • Government could sell off certain non-financial companies to infuse capital in state-run banks
  • Corporate, bank balance sheets remain stretched, affecting prospects for reviving private investments.
Unemployment and job creation
  • The performance in job creation has been dismal in the previous year. As job creation has emerged as a major challenge for the economy, the Economic Survey 2016-17 tabled in Parliament on Tuesday pointed out that the focus should be towards labour-intensive sectors such as apparel and leather.
  • The Survey pointed out that the rising labour cost in China is leading to a situation where the country is gradually vacating its dominant position in these sectors and India should look to capitalise on the opportunity through required change in policy.
  • It also called for easing labour regulations and negotiating free trade agreements (FTAs) with the European Union (EU) and the UK.
  • Based on recent in-house analysis in 2016, it is estimated that an FTA with the EU and the UK can lead to 1,08,029, 23,156, and 14,347 additional direct jobs per annum in the apparel, leather and footwear sectors respectively.
  • Stating that if rapid economic growth is one critical element of the policy response, enabling environment for investments and targeted action are also key requirements.
  • Though India has the comparative advantage in terms of cheaper and more abundant labour, the Survey pointed out that the two sectors face common challenges such as logistics, labour regulations, and tax & tariff policy, and disadvantages emanating from the international trading environment compared to competitor countries.

    Economic Survey-Unemployment Rate
    Unemployment Rate-2015-16
Universal basic income

UBI scheme seeks to provide a minimum income to citizens. While a pure UBI advocates the government guaranteeing a minimum income level for all citizens, irrespective of their income, India, if it were to go ahead with a scheme on these lines, is more likely to tweak the broader concept to target people facing abject poverty. In July last year, Chief Economic Adviser Arvind Subramanian argued that a basic income scheme can be tried in the most disadvantaged regions of the country, rather than making it universal to start with. Last week, speaking at World Economic Forum in Davos, Niti Aayog CEO Amitabh Kant said the government can try UBI in the form of interest free loan to poor people for a period of 3-4 years, which is repaid and recycled. He said UBI will be important in the context of disruption being caused in the job market through automation, and the government needs to do an in-depth analysis before launching such a scheme. In the Indian context, a universal basic income has to be examined in the context of the fact that you already have a rural employment guarantee scheme, which is being implemented but has huge leakages. There is public distribution system being implemented, but again is riddled with corruption.  It is better option to put money directly into the accounts of the poor, because it will spur rural demand. Hence, Universal Basic Income (UBI) proposal is a powerful idea, but not ready for implementation.

  • UBI an alternative to plethora of state subsidies for poverty alleviation
  • UBI would cost between 4 and 5 per cent of GDP
  • Among the developed countries, Switzerland had recently rejected a proposal in a referendum to provide UBI, while Finland announced a pilot project for such a scheme. India did a similar pilot in two villages of Madhya Pradesh in 2010.
  • The government would present a cost-benefit analysis on various subsidies being given to the poor, vis-a-vis giving them direct cash transfer in the form of UBI, the official said.
  • During 2016-17, the Centre has estimated its expenditure on subsidies at Rs 2.5 lakh crore. The largest chunk of Rs 1.34 lakh crore has been estimated as food subsidy for the year, while Rs 70,000 crore is the estimated subsidy for fertilisers. Petroleum products accounted for another Rs 26,947 crore, which include Rs 19,802.79 crore for subsidy on LPG and Rs 7,144.21 crore for kerosene subsidy.
  • The government also planned to provide Rs 15,000 crore as interest subvention subsidy for providing short term credit to farmers. These are the main subsidies currently provided by the government. Apart from these subsidies, the government allocated another Rs 38,500 crore for the flagship MGNREGS (Mahatma Gandhi National Employment Guarantee Scheme).
Real Estate

Survey says that reality prices may deep further as investing undeclared income in real estate became tough after November 8, 2016. It also speaks of bringing real estate within the ambit of GST.

India is on the path of progress notwithstanding the problems it is facing, because the policy makers are aware about the problems and have the will power to address them by a mix of intelligent, sensible and implementable policies.

Business and Economy Economic Development and Policies

Key Features of Budget 2016-2017

Courtesy: Indiabudget.nic
Key Features of Budget 2017-2018-Union Budget & Economic Survey (Read An Analysis of Economic Survey here)
• In the last two and half years administration has moved from discretionary, favouritism based to system and transparency based
• Inflation brought under control. CPI-based inflation declined from 6% in July 2016 to 3.4% in December, 2016
• Economy has moved on a high growth path.
• India’s Current Account Deficit declined from about 1% of GDP last year to 0.3% of GDP in the first half of 2016-17.
• FDI grew 36% in H1 2016-17 over H1 2015-16, despite 5% reduction in global FDI inflows. Foreign exchange reserves have reached 361 billion US Dollars as on 20th January, 2017
• War against black money launched
• Government continued on path of fiscal consolidation, without compromising on public investment.
• The Indian economy has been robust to mild shocks and IMF forecasts, India to be one of the fastest growing major economies in 2017
 World economy faces considerable uncertainty, in the aftermath of major economic and political developments during the last year
 The US Federal Reserve’s , intention to increase policy rates in 2017, may lead to lower capital inflows and higher outflows from the emerging economies
 Uncertainty around commodity prices, especially that of crude oil, has implications for the fiscal situation of emerging economies
 Signs of retreat from globalisation of goods, services and people, as pressures for protectionism are building up
 Passage of the Constitution Amendment Bill for GST and the progress for its introduction
 Demonetisation of high denomination bank notes
 Enactment of the Insolvency and Bankruptcy Code; amendment to the RBI Act for inflation targeting; enactment of the Aadhar bill for disbursement of financial subsidies and benefits Budget 2017-18 contains 3 major reforms. First, presentation of Budget advanced to 1st February to enable the Ministries to operationalise all activities from the commencement of the financial year. Second, merger of Railways Budget with General Budget to bring Railways to the centre stage of Government’s Fiscal Policy and Third, removal of plan and nonplan classification of expenditure to facilitate a holistic view of allocations for sectors and ministries.
 Bold and decisive measure to curb tax evasion and parallel economy
 Government’s resolve to eliminate corruption, black money, counterfeit currency and terror funding
 Drop in economic activity, if any, to be temporary
 Generate long term benefits including reduced corruption, greater digitisation, increased flow of financial savings and greater formalisation of the economy
 Pace of remonetisation has picked up and will soon reach comfortable levels
 The surplus liquidity in the banking system will lower borrowing costs and increase the access to credit Announcements made by the Honourable Prime Minister on 31st Dec, 2016 focusing on housing for the poor; relief to farmers; credit support to MSMEs; encouragement to digital transactions; assistance to pregnant women and senior citizens; and priority to dalits, tribals, backward classes and women under the Mudra Yojana, address key concerns of our economy
Agenda for 2017-18 is : “Transform, Energise and Clean India” – TEC India
TEC India seeks to
1. Transform the quality of governance and quality of life of our people;

2. Energise various sections of society, especially the youth and the

3. vulnerable, and enable them to unleash their true potential; and Clean the country from the evils of corruption, black money and

4. non-transparent political funding
Ten distinct themes in Budget to foster this broad agenda:

1. Farmers : committed to double the income in 5 years;

2. Rural Population : providing employment & basic infrastructure;

3. Youth : energising them through education, skills and jobs;

4. The Poor and the Underprivileged : strengthening the systems of social security, health care and affordable housing; Infrastructure: for efficiency, productivity and quality of life; 5. Financial Sector : growth & stability by stronger institutions;

6. Digital Economy : for speed, accountability and transparency;

7. Public Service : effective governance and efficient service delivery through people’s participation;

8. Prudent Fiscal Management: to ensure optimal deployment of resources and preserve fiscal stability;

9. Tax Administration: honouring the honest.

10. FARMERS (a) Target for agricultural credit in 2017-18 has been fixed at a record level of Rs. 10 lakh crores

(b) Farmers will also benefit from 60 days’ interest waiver announced on 31 Dec 2016

(c ) To ensure flow of credit to small farmers, Government to support NABARD for computerisation and integration of all 63,000 functional Primary Agriculture Credit Societies with the Core Banking System of District Central Cooperative Banks. This will be done in 3 years at an estimated cost of Rs. 1,900 crores

(d) Coverage under Fasal Bima Yojana scheme will be increased from 30% of cropped area in 2016-17 to 40% in 2017-18 and 50% in 2018-19 for which a budget provision of Rs. 9000 crore has been made

(e) New mini labs in Krishi Vigyan Kendras (KVKs) and ensure 100% coverage of all 648 KVKs in the country for soil sample testing

(f) As announced by the Honourable Prime Minister, the Long Term Irrigation Fund already set up in NABARD to be augmented by 100% to take the total corpus of this Fund to Rs.40,000 crores.

(g) Dedicated Micro Irrigation Fund in NABARD to achieve ‘per drop more crop’ with an initial corpus of Rs. 5,000 crores

(h) Coverage of National Agricultural Market (e-NAM) to be expanded from 250 markets to 585 APMCs.

(i) Assistance up to Rs.75 lakhs will be provided to every e-NAM A model law on contract farming to be prepared and circulated among the States for adoption Dairy Processing and Infrastructure Development

(j) Fund to be set up in NABARD with a corpus of Rs. 2000 crores and will be increased to Rs. 8000 crores over 3 years
 Over Rs. 3 lakh crores spent in rural areas every year, for rural poor from Central Budget, State Budgets, Bank linkage for self-help groups, etc
 Aim to bring one crore households out of poverty and to make 50,000 Gram Panchayats poverty free by 2019, the 150th birth anniversary of Gandhiji
 Against target of 5 lakh farm ponds under MGNREGA, 10 lakh farm ponds would be completed by March 2017. During 2017-18, another 5 lakh farm ponds will be taken up
 Women participation in MGNREGA has increased to 55% from less than 48%
 MGNREGA allocation to be the highest ever at Rs.48,000 crores in 2017-18. 5
 Pace of construction of PMGSY roads accelerated to 133 km roads per day in 2016-17, against an avg. of 73 km during 2011-2014
 Government has taken up the task of connecting habitations with more than 100 persons in left wing extremism affected Blocks under PMGSY. All such habitations are expected to be covered by 2019 and the allocation for PMGSY, including the State’s Share is Rs. 27,000 crores in 2017-18
 Allocation for Pradhan Mantri Awaas Yojana – Gramin increased from Rs. 15,000 crores in Budget  2016-17 to Rs. 23,000 crores in 2017-18 with a target to complete 1 crore houses by 2019 for the houseless and those living in kutcha houses.
 Well on our way to achieving 100% village electrification by 1st May 2018.
 Allocation in Budget for Prime Minister’s Employment Generation Program and Credit Support Schemes has been increased three fold
 Sanitation coverage in rural India has gone up from 42% in Oct 2014 to about 60%.
 Open Defecation Free villages are now being given priority for piped water supply. As part of a sub mission of the National Rural Drinking Water Programme (NRDWP), it is proposed to provide safe drinking water to over 28,000 arsenic and fluoride affected habitations in the next four years. For imparting new skills to people in rural areas, mason training will be provided to 5 lakh persons by 2022 A programme of “human resource reforms for results” will be launched during 2017-18 for human resources development in Panchayati Raj Institutions
 Total allocation for Rural, Agriculture and Allied sectors is Rs. 187223 crores in Budget 2017-18
 To introduce a system of measuring annual learning outcomes in our schools Innovation
 Fund for Secondary Education proposed to encourage local innovation for ensuring universal access, gender parity and quality improvement to be introduced in 3479 educationally backward districts.
 Good quality higher education institutions to have greater administrative and academic autonomy SWAYAM platform, leveraging IT, to be launched with at least 350 online courses. This would enable students to virtually attend courses taught by the best faculty
 National Testing Agency to be set-up as an autonomous and self-sustained premier testing organisation to conduct all entrance examinations for higher education institutions
 Pradhan Mantri Kaushal Kendras to be extended to more than 600 districts across the country.
 100 India International Skills Centres will be established across the country. Skill Acquisition and Knowledge Awareness for Livelihood Promotion programme (SANKALP) to be launched at a cost of Rs. 4000 crores.
 SANKALP will provide market relevant training to 3.5 crore youth Next phase of Skill Strengthening for Industrial Value Enhancement (STRIVE) will also be launched in 2017-18 at a cost of Rs. 2,200 crores
 A scheme for creating employment in the leather and footwear industries along the lines in Textiles Sector to be launched
 Incredible India Campaign will be launched across the world to promote tourism and employment.
 Mahila Shakti Kendra will be set up with an allocation of Rs.500 crores in 14 lakh ICDS Anganwadi Centres. This will provide one stop convergent support services for empowering rural women with opportunities for skill development, employment, digital literacy, health and nutrition Under Maternity Benefit Scheme Rs. 6,000 each will be transferred directly to the bank accounts of pregnant women who undergo institutional delivery and vaccinate their children
 Affordable housing to be given infrastructure status
 National Housing Bank will refinance individual housing loans of about Rs. 20,000 crore in 2017-18
 Government has prepared an action plan to eliminate Kala-Azar and Filariasis by 2017, Leprosy by 2018, Measles by 2020 and Tuberculosis by 2025 is also targeted
 Action plan has been prepared to reduce IMR from 39 in 2014 to 28 by 2019 and MMR from 167 in 2011-13 to 100 by 2018-2020
 To create additional 5,000 Post Graduate seats per annum to ensure adequate availability of specialist doctors to strengthen Secondary and Tertiary levels of health care
 Two new All India Institutes of Medical Sciences to be set up in Jharkhand and Gujarat
 To foster a conducive labour environment, legislative reforms will be undertaken to simplify, rationalise and amalgamate the existing labour laws into 4 Codes on (i) wages; (ii) industrial relations; (iii) social security and welfare; and (iv) safety and working conditions.
 Propose to amend the Drugs and Cosmetics Rules to ensure availability of drugs at reasonable prices and promote use of generic medicines
 The allocation for Scheduled Castes has been increased by 35% compared to BE 2016-17.
 The allocation for Scheduled Tribes has been increased to Rs.31,920 crores and for Minority Affairs to Rs. 4,195 crores
 For senior citizens, Aadhar based Smart Cards containing their health details will be introduced
 For transportation sector as a whole, including rail, roads, shipping, provision of Rs. 2,41,387 crores has been made in 2017-18.
 For 2017-18, the total capital and development expenditure of Railways has been pegged at Rs. 1,31,000 crores. This includes Rs. 55,000 crores provided by the Government
 For passenger safety, a Rashtriya Rail Sanraksha Kosh will be created with a corpus of Rs. 1 lakh crores over a period of 5 years
 Unmanned level crossings on Broad Gauge lines will be eliminated by 2020
 In the next 3 years, the throughput is proposed to be enhanced by 10%.
 This will be done through modernisation and upgradation of identified corridors.
 Railway lines of 3,500 kms will be commissioned in 2017-18.
 During 2017-18, at least 25 stations are expected to be awarded for station redevelopment.
 500 stations will be made differently abled friendly by providing lifts and escalators.
 It is proposed to feed about 7,000 stations with solar power in the medium term
 SMS based Clean My Coach Service has been started
 ‘Coach Mitra’, a single window interface, to register all coach related complaints and requirements to be launched
 By 2019, all coaches of Indian Railways will be fitted with bio toilets.
 Tariffs of Railways would be fixed, taking into consideration costs, quality of service and competition from other forms of transport
 A new Metro Rail Policy will be announced with focus on innovative models of implementation and financing, as well as standardisation and indigenisation of hardware and software
 A new Metro Rail Act will be enacted by rationalising the existing laws. This will facilitate greater private participation and investment in construction and operation.
 In the road sector, Budget allocation for highways increased from Rs. 57,976 crores in BE 2016-17 to Rs. 64,900 crores in 2017-18
 2,000 kms of coastal connectivity roads have been identified for construction and development
 Total length of roads, including those under PMGSY, built from 2014-15 till the current year is about 1,40,000 kms which is significantly higher than previous three years
 Select airports in Tier 2 cities will be taken up for operation and maintenance in the PPP mode
 By the end of 2017-18, high speed broadband connectivity on optical fibre will be available in more than 1,50,000 gram panchayats, under BharatNet.
 A DigiGaon initiative will be launched to provide tele-medicine, education and skills through digital technology
 Proposed to set up strategic crude oil reserves at 2 more locations, namely, Chandikhole in Odisha and Bikaner in Rajasthan. This will take our strategic reserve capacity to 15.33 MMT
 Second phase of Solar Park development to be taken up for additional 20,000 MW capacity.
 For creating an eco-system to make India a global hub for electronics manufacturing a provision of Rs. 745 crores in 2017-18 in incentive schemes like M-SIPS and EDF.
 A new and restructured Central scheme with a focus on export infrastructure, namely, Trade Infrastructure for Export Scheme (TIES) will be launched in 2017-18
 Foreign Investment Promotion Board to be abolished in 2017-18 and further liberalisation of FDI policy is under consideration
 An expert committee will be constituted to study and promote creation of an operational and legal framework to integrate spot market and derivatives market in the agricultural sector, for commodities trading. e- NAM to be an integral part of the framework
 Bill relating to curtail the menace of illicit deposit schemes will be introduced.
 A bill relating to resolution of financial firms will be introduced in the current Budget Session of Parliament. This will contribute to stability and resilience of our financial system
 A mechanism to streamline institutional arrangements for resolution of disputes in infrastructure related construction contracts, PPP and public utility contracts will be introduced as an amendment to the Arbitration and Conciliation Act 1996.
 A Computer Emergency Response Team for our Financial Sector (CERT-Fin) will be established
 Government will put in place a revised mechanism and procedure to ensure time bound listing of identified CPSEs on stock exchanges.
 The shares of Railway PSEs like IRCTC, IRFC and IRCON will be listed in stock exchanges.
 Propose to create an integrated public sector ‘oil major’ which will be able to match the performance of international and domestic private sector oil and gas companies
 A new ETF with diversified CPSE stocks and other Government holdings will be launched in 2017-18 In line with the ‘Indradhanush’ roadmap, Rs.10,000 crores for recapitalisation of Banks provided in 2017-18
 Lending target under Pradhan Mantri Mudra Yojana to be set at Rs. 2.44 lakh crores. Priority will be given to Dalits, Tribals, Backward Classes and Women.
 125 lakh people have adopted the BHIM app so far. The Government will launch two new schemes to promote the usage of BHIM; these are, Referral Bonus Scheme for individuals and a Cashback Scheme for merchants
 Aadhar Pay, a merchant version of Aadhar Enabled Payment System, will be launched shortly
 A Mission will be set up with a target of 2,500 crore digital transactions for 2017-18 through UPI, USSD, Aadhar Pay, IMPS and debit cards
 A proposal to mandate all Government receipts through digital means, beyond a prescribed limit, is under consideration
 Banks have targeted to introduce additional 10 lakh new POS terminals by March 2017. They will be encouraged to introduce 20 lakh Aadhar based POS by September 2017
 Proposed to create a Payments Regulatory Board in the Reserve Bank of India by replacing the existing Board for Regulation and Supervision of Payment and Settlement Systems
 The Government e-market place which is now functional for procurement of goods and services
 To utilise the Head Post Offices as front offices for rendering passport services
 A Centralised Defence Travel System has been developed through which travel tickets can be booked online by our soldiers and officers
 Web based interactive Pension Disbursement System for Defence Pensioners will be established
 To rationalise the number of tribunals and merge tribunals wherever appropriate
 Commemorate both Champaran and Khordha revolts appropriately
 Stepped up allocation for Capital expenditure by 25.4% over the previous year
 Total resources being transferred to the States and the Union Territories with Legislatures is Rs. 4.11 lakh crores, against Rs. 3.60 lakh crores in BE 2016-17
 For the first time, a consolidated Outcome Budget, covering all Ministries and Departments, is being laid along with the other Budget documents
 FRBM Committee has recommended 3% fiscal deficit for the next three years, keeping in mind the sustainable debt target and need for public investment, fiscal deficit for 2017-18 is targeted at 3.2% of GDP and Government remains committed to achieve 3% in the following year
 Net market borrowing of Government restricted to Rs. 3.48 lakh crores after buyback in 2017-18, much lower than Rs. 4.25 lakh crores of the previous year
 Revenue Deficit of 2.3% in BE 2016-17 stands reduced to 2.1% in the Revised Estimates.
 The Revenue Deficit for next year is pegged at 1.9% , against 2% mandated by the FRBM Act
 Between 8th November and 30th December 2016, deposits between 2 lakh Rupees and 80 lakh Rupees were made in about 1.09 crore accounts with an average deposit size of Rs. 5.03 lakh.
 Deposits of more than 80 lakh were made in 1.48 lakh accounts with average deposit size of Rs. 3.31 crores.
 Under the scheme for profit-linked income tax deduction for promotion of affordable housing, carpet area instead of built up area of 30 and 60 will be counted. The 30 limit will apply only in case of municipal limits of 4 metropolitan cities while for the rest of the country including in the peripheral areas of metros, limit of 60 will apply
 For builders for whom constructed buildings are stock-in-trade, tax on notional rental income will only apply after one year of the end of the year in which completion certificate is received
 Reduction in the holding period for computing long term capital gains from transfer of immovable property from 3 years to 2 years. Also, the base year for indexation is proposed to be shifted from 1.4.1981 to 1.4.2001 for all classes of assets including immovable property
 For Joint Development Agreement signed for development of property, the liability to pay capital gain tax will arise in the year the project is completed
 Exemption from capital gain tax for persons holding land on 2.6.2014, the date on which the State of Andhra Pradesh was reorganised, and whose land is being pooled for creation of capital city of Andhra Pradesh under the Government scheme
 Concessional withholding rate of 5% charged on interest earned by foreign entities in external commercial borrowings or in bonds and Government securities is extended to 30.6.2020. This benefit is also extended to Rupee Denominated (Masala) Bonds
 For the purpose of carry forward of losses in respect of start-ups, the condition of continuous holding of 51% of voting rights has been relaxed subject to the condition that the holding of the original promoter/promoters continues. Also the profit (linked deduction) exemption available to the start-ups for 3 years out of 5 years is changed to 3 years out of 7 years
 MAT credit is allowed to be carried forward up to a period of 15 years instead of 10 years at present
 In order to make MSME companies more viable, income tax for companies with annual turnover upto ` 50 crore is reduced to 25%
 Allowable provision for Non-Performing Asset of Banks increased from 7.5% to 8.5%.
 Interest taxable on actual receipt instead of accrual basis in respect of NPA accounts of all non-scheduled cooperative banks also to be treated at par with scheduled banks
 Basic customs duty on LNG reduced from 5% to 2.5%
 Under scheme of presumptive income for small and medium tax payers whose turnover is upto 2 crores, the present, 8% of their turnover which is counted as presumptive income is reduced to 6% in respect of turnover which is by non-cash means
 No transaction above Rs. 3 lakh would be permitted in cash subject to certain exceptions
 Miniaturised POS card reader for m-POS (other than mobile phones or tablet computers), micro ATM standards version 1.5.1, Finger Print Readers / Scanners and Iris Scanners and on their parts and components for manufacture of such devices to be exempt from BCD, Excise/CV duty and SAD
 Need to cleanse the system of political funding in India
 Maximum amount of cash donation, a political party can receive, will be Rs.2000/- from one person.
 Political parties will be entitled to receive donations by cheque or digital mode from their donors.
 Amendment to the Reserve Bank of India Act to enable the issuance of electoral bonds in accordance with a scheme that the Government of India would frame in this regard.
 Every political party would have to file its return within the time prescribed in accordance with the provision of the Income-tax Act
 Existing exemption to the political parties from payment of income-tax would be available only subject to the fulfillment of these conditions
 Scope of domestic transfer pricing restricted to only if one of the entities involved in related party transaction enjoys specified profit-linked deduction
 Threshold limit for audit of business entities who opt for presumptive income scheme increased from Rs. 1 crore to Rs. 2 crores.
 Similarly, the threshold for maintenance of books for individuals and HUF increased from turnover of 10 lakhs to 25 lakhs or income from 1.2 lakhs to 2.5 lakhs
 Foreign Portfolio Investor (FPI) Category I & II exempted from indirect transfer provision.
 Indirect transfer provision shall not apply in case of redemption of shares or interests outside India as a result of or arising out of redemption or sale of investment in India which is chargeable to tax in India
 Commission payable to individual insurance agents exempt from the requirement of TDS subject to their filing a self-declaration that their income is below taxable limit
 Under scheme for presumptive taxation for professionals with receipt upto Rs. 50 lakhs p.a. advance tax can be paid in one instalment instead of four
 Time period for revising a tax return is being reduced to 12 months from completion of financial year, at par with the time period for filing of return.
 Also the time for completion of scrutiny assessments is being compressed further from 21 months to 18 months for Assessment Year 2018-19 and further to 12 months for Assessment Year 2019-20 and thereafter
 Existing rate of taxation for individual assesses between income of Rs.2.5 lakhs to 5 lakhs reduced to 5% from the present rate of 10%
 Surcharge of 10% of tax payable on categories of individuals whose annual taxable income is between Rs.50 lakhs and Rs. 1 crore
 Simple one-page form to be filed as Income Tax Return for the category of individuals having taxable income upto Rs. 5 lakhs other than business income
 Appeal to all citizens of India to contribute to Nation Building by making a small payment of 5% tax if their income is falling in the lowest slab of 2.5 lakhs to 5 lakhs
 The GST Council has finalised its recommendations on almost all the issues based on consensus on the basis of 9 meetings held
 Preparation of IT system for GST is also on schedule.
 The extensive reach-out efforts to trade and industry for GST will start from 1st April, 2017 to make them aware of the new taxation system.
 RAPID (Revenue, Accountability, Probity, Information and Digitisation)
 Maximise efforts for e-assessment in the coming year
 Enforcing greater accountability of officers of Tax Department for specific act of commission and omission