The Budget 2016 saw Modi government lay stress on the farmers and the agriculture sector. The Modi government has also set audacious revenue targets for proceeds from the divestment of state-owned companies and telecom bandwidth sales. The budget has also set high targets for direct tax collection, based on a 12 per cent growth estimate for corporate earnings. A bilateral commitment to fiscal discipline and boost infrastructure investment, entrepreneurship, and domestic consumption. A very positive budget with its focus on transformation, Chief Economic Advisor Arvind Subramaniam called Jaitley's balancing act between the dual priorities a “magic trick”.
Low commodity prices and a tamed CPI inflation of 5.4 per cent gives the Reserve Bank of India Governor Raghuram Rajan greater fiscal space to cut interest rates in upcoming months. India's current account deficit is down to 1.4 per cent of its GDP and its foreign exchange reserves have climbed to US$ 350 billion. The budget also confirmed that India has achieved the highest coal production growth in over two decades, highest ever capacity addition in generation, and highest ever increase in transmission lines, as the burgeoning country leapfrogs towards transformative growth.
The Modi sarkar, with its budget, has shown a strong commitment to, develop the corporate bond market, increase retail access to government securities and, radically improve the ease of doing business in India. Also, by expanding the basket of eligible FDI instruments to include certain hybrid instruments, the budget confirms the government's evolving capacity to appreciate nuances within corporate securities utilised in global finance.
Talking about the budget, former director of IIM-A and the current director general of International Management Institute, Delhi, Bakul Dholakia said, “Priority on rural and agriculture sector is a well thought-out process. If what is mentioned in the budget actually happens then we might witness a second green revolution in next two years. Now the ball is in the court of Reserve Bank of India. I expect RBI to announce reduction in interest rates.” Former Gujarat minister and economist, Jay Narayan Vyas said, “If the Rs 86,500 crore for accelerated irrigation programmes is implemented honestly, 50 per cent of agriculture in the country will become rain-independent, which will boost demand and bring overall prosperity.”
Managing partner of Economic Laws Practice, Rohan Shah said, “On the indirect tax front there are some clear positives for the corporate community. The thrust on measures to reduce tax litigation is welcome as it will help resolve pending disputes and also create certainty in the future. In view of the impending move to GST, certain measures have been taken, including the imposition of an additional cess of 0.5 per cent ad valorem.” He added, “On direct taxes, the beneficial taxation regime for new manufacturing units, start-ups, asset reconstruction companies and global patent incomes are all positive and supportive steps. The introduction of a fresh scheme of amnesty in direct taxes with a more benign interest and penalty, as also assurances against prosecution, may well elicit a far greater participation. The adoption of the Easwar Committee Report on simplifications is also welcome.”
