Following finance minister Arun Jailtley’s Budget 2017 announcement, all eyes are set on the results of the pre budget economic survey for this year. Pre-budget 2017 survey that is set to release today was authored by Arvind Subramanian – the Chief Economic Advisor of Indian government, who replaced Raghuram Rajan in October 2014. This has increased anticipation of the Indian public that expects Subramanian to offer clarity on government priorities and to cope with the harsh impact of demonetisation on the Indian economy.
7 Key Points Covered by Pre Budget Economic Survey
- Cashless Economy
Pre-budget memorandum 2017-2018 is expected to pitch cashless economy in India. It’ll lay out detailed measures for implementing digital policies. It’ll also describe the capacity of Indian economy to adapt new changes.
- Soft Copies for Record
In line with the Centre’s “Go Green for Digital Economy” mantra, the economic survey budget 2017 will be paperless this time. Very limited copies of the budget and the survey would be printed. All documents related to it will be posted on the Finance Ministry’s online portal.
- Twin Memorandums in January and July
Before the scheduled release of Budget 2017, the Economic Survey 2017 will come in two parts– the pre-budget survey would focus on the economic developments of 2016. Based on the accomplishments post-budget this year, another survey will release comprehensive release
- Fight Against Black Economy
Last year, Prime Minister Narendra Modi’s prime focus was to eliminate black money from the system. Though the government was somewhat successful in curbing money laundering, much needs to be done. The RBI has siphoned a majority of funds accumulated through tax thefts. There next target is the possible crackdown of ‘benami’ (illegal) properties. The survey focuses on the Centre’s quest for black money hordes both inside and outside the country.
- Aftermath of Demonetisation
The economic experts across the country are divided in their opinions on impact of demonetisation on Indian GDP growth. The numbers released by the CSO (Central Statistics Office) didn’t describe the outcome of demonetisation on Indian GDP for the month of January. Subramanian is likely to present his estimates in this regard.
- Criteria for Universal Basic Income
Budget 2017 revolves around the concept of universal basic income. Seeing that the banks have managed to draw in maximum revenues in last six months, the idea of a cashless society will convert shifting subsidies into direct delivery of benefits to the poor.
- India-America Trade Relations
One just cannot neglect the ‘Trump Effect’ anymore. The crowning of Donald Trump as the US President this year could have a major impact on Indian economy. Considering the US President’s views worker visas, Indian exporters may face the brunt of changes in duty structures and international trade agreements.
Pre Budget Expectations 2017
- Lower Tax Rates
Last month, the finance minister has dropped hints at lowering tax rates. It’s because broader tax base has the potential to generate greater revenues. Economists predict that people with annual income of less than Rs 4 lakh don’t have to pay any taxes.
- Tax Saving Vehicles for the Elderly
This year’s union budget may shower blessings on the elderly. Streamlining the existing bank deposits can provide returns worth 7-8% for senior citizens. Experts are speculating that pension income may be tax free.
- High taxes on Gains from Stock Investments
After the introduction of Budget 2017-2018, the government may introduce new rules for taxing up to 20% amount on capital gains from stock investments.
- Reinforcing Defence Budget
This year, the ministry of finance is expected to offer 10% hike in defence budget. These additional funds will be used for acquisition of latest weaponry. This will lay a positive impact on the stocks of BEL and BEML.
- Railway Safety Fund
The Railway Ministry will impose an additional safety cess to collect funds for Rashtriya Rail Sanraksha Kosh. The additional Rs 1.2 crores generated through this fund will be used for strengthening safety measures.
- Other Sectors
There are speculations regarding discontinuation of sugar subsidy, MAT and Corporate Income Tax reduction on card transactions, Tax breaks and FDI for boosting start-ups, and large capital investment in the IT industry for digital boom.
These are possible speculations surrounding Budget 2017. For now, we just have to wait and watch for the possible outcomes.