Retail inflation to be below 5% in FY17: Economic Survey

Budget India 2017 – Retail inflation is likely to be well below RBI’s target of 5 per cent in the current fiscal as demonetisation would discourage any price headwind, the Economic Survey for 2016-17 said on Tuesday.

The new inflation targeting approach by the Monetary Policy Committee (MPC) and gains from macro-economic stability will help India consolidate gains on price control, meaning prices will be less susceptible to individual whims and caprice of governments, the Survey said.

“The outlook for the year as a whole is for CPI inflation to be below the RBI’s target of 5 per cent, a trend likely to be assisted by demonetisation,” said the Economic Survey presented in Parliament by Finance Minister Arun Jaitley.

In the current financial year so far, retail inflation stabilised around 5 per cent, while wholesale price-based inflation averaged around 2.9 per cent during April-December.

“Codified the institutional arrangements on monetary policy with the Reserve Bank to consolidate the gains from macroeconomic stability by ensuring that inflation control will be less susceptible to the whims of individuals and the caprice of governments,” it said.(Read More)

Fiscal deficit in April-December hits 94% of budget target

Budget india 2017 – Fiscal deficit in the first nine months of 2016-17 touched 93.9 per cent of the Budget target as against 87.9 per cent for the same period a year ago.

In value terms, the April-December fiscal deficit stood at Rs 5.01 lakh crore, or 93.9 per cent, of 2016-17 Budget estimates (BE). The fiscal deficit stood at 87.9 per cent in the corresponding nine months a year ago, as per 2015-16 BE.

Fiscal deficit, the gap between expenditure and revenue for the entire fiscal, has been pegged at Rs 5.33 lakh crore, or 3.5 per cent of the GDP, for the financial year 2016-17.

As per data released by the Controller General of Accounts (CGA), tax revenue came in at Rs 7.52 lakh crore, or 71.4 per cent of the full-year BE of Rs 10.54 lakh crore.

Total receipts from revenue and non-debt capital of the government during the period read Rs 9.68 lakh crore or 67.1 per cent of BE.

The government’s Plan expenditure during the fiscal came in at Rs 4.10 lakh core, 74.6 per cent of the full-year budget estimate. During the same period last year, it stood at 74.4 per cent.

The Non-Plan expenditure in April-December of 2016-17 was Rs 10.59 lakh crore, or 74.2 per cent, of the whole-year estimate.(Read More)

Rail Budget to focus on safety, infrastructure development

Budget 2017 – A safety fund of Rs 20,000 crore for railways reeling under a series of deadly derailments, development of new lines, station redevelopment and setting up of Rail Development Authority and high-speed rail authority will be in focus as Finance Minister Arun Jaitley presents the first Rail Budget subsumed in the General Budget tomorrow.

Going ahead with the government’s reform agenda, Jaitley will discard the 92-year-long tradition of presentation of a separate Rail Budget and instead make it part of the General Budget earmarking a few paragraphs on the public transporter’s finance, projects and the road map for the next fiscal.

Jailtley is likely to give more focus on infrastructure development such as new lines, doubling, station redevelopment, safety upgradation.

Reeling under a series of derailments, the Budget is likely to announce the creation of a separate safety fund of about Rs 1 lakh crore over the next five years out of which Rs 20,000 crore will be earmarked for 2017-18, according to sources.

Railways will also miss the operating ratio target of 92 per cent and is likely to settle at about 94-95 per cent.

The Budget 2017-18 is likely to announce setting up of Rail Development Authority, a regulatory authority for the public transporter. The formation of high speed rail authority with the selection of its managing Director and other directors is also likely to be announced.(Read More)

Budget 2017: Nearly 13 cr poor covered under social security schemes

Budget 2017 – Observing that financial inclusion was the key to poverty alleviation, President Pranab Mukherjee on Tuesday said close to 13 crore poor have been covered under various social security schemes of the Narendra Modi government.

Addressing the customary joint session of both houses of parliament ahead of the budget session, Mukherjee said the core of all government policies was inclined towards achieving welfare of the poor, Dalits, deprived, underprivileged, farmers, workers and the youth.

Enumerating various pro-poor schemes, Mukherjee said the government was guided by the philosophy of ‘Antyodaya’ (integral humanism).

“To take the banking system to the doorstep of the poor and the unbanked, the Indian Postal Payment Bank was started. An unprecedented 26 crore plus Jan Dhan accounts were opened for the unbanked,” he said.

“My government is committed to providing shelter to every houseless poor household through the Pradhan Mantri Aawas Yojana,” he said.

Mukherjee said that under the Deen Dayal Antyodaya Yojana, over Rs 16,000 crore have been made available to self-help groups (SHGs) in the current financial year while over Rs 2 lakh crore was provided through 5.6 crore loans sanctioned under Pradhan Mantri Mudra Yojana.(Read More)

Budget 2017: PM Narendra Modi looks forward to ‘fruitful’ session

Budget 2017 – Prime Minister Narendra Modi on Tuesday ahead of the budget session hoped that the current session will be “fruitful” and all political parties will work together for people’s benefit.

“We had discussions with every political party individually and collectively. There should be productive and detailed discussion of the budget during the session,” Modi said while addressing the media here.

“I urge all parties to help in smooth functioning of the session. I hope for fruitful discussions. We aim at positive and meaningful debates for public interest.

“I am hopeful all political parties will work together to move forward,” he said.

Modi also said: “This is the first time the budget is being presented on February 1.”

“Everyone would remember that earlier budget used to take place at 5 pm. This practice was changed during former Prime Minister Atal Bihari Vajpayee’s time,” Modi said.

“Today (Tuesday) a new tradition will begin. The budget will incorporate the rail budget as well,” he added.(Read More)

Staffing industry seeks resolution of tax woes in Budget

Budget 2017 – Wants TDS to be cut from 10% to 2%, and applied on commission earned, not on gross invoice value

The staffing industry, representing companies such as Team Lease and Quess, wants finance minister Arun Jaitley to resolve the tax anomalies it faces, in the upcoming Budget.

The Indian Staffing Federation says that its demand assumes significance since post-demonetisation it is the formal sector which will grow and the staffing industry will play a crucial role in that.

The industry represents contract hiring in organised industry done through tri-partite agreements — between the company that is hiring, the person hired and the staffing industry.

The Federation said tax deducted at source (TDS) is imposed on the gross invoices received by its members from its client companies, whereas it should be on just the commission received by the staffing companies.

While this amount is adjusted later, it takes about a year to happen, creating cash flow problems for staffing companies, says Suchita Dutta, executive director of the Federation.

At the same time, the Federation said its members topped the list of India staffing firms, as per the recent report published by Staffing Industry Analysts. The report indicated that the Indian staffing industry was estimated to be worth Rs 27,000 crore in 2015 and is forecast to grow by 12 per cent in 2016 and 10 per cent in 2017.

When asked when there is cash flow problems, how come the industry is performing so well, Dutta said the results are based on top lines and not bottom lines.(Read More)

Budget 2017: Govt likely to hike agri-credit target to Rs 10 lakh crore

Budget 2017 – The farm credit target is likely to be raised by a whopping Rs 1 lakh crore to Rs 10 lakh crore in Budget 2017-18 in order to increase credit flow in the agriculture sector.

According to sources, the government may increase the agriculture credit target to Rs 10 lakh crore for 2017-18 fiscal from the existing Rs 9 lakh crore.

During April-September period of 2016-17 fiscal, about Rs 7.56 lakh crore credit has been disbursed to farmers and the total target is likely to be surpassed.

That apart, the government may also allocate Rs 10,000 crore for Pradhan Mantri Fasal Bhima Yojana (PMFBY) in the Union Budget to be presented by Finance Minister Arun Jaitley on February 1.

For this fiscal, the government had allocated Rs 5,500 crore for this scheme, but later it was increased to over Rs 13,000 crore in the revised budget estimate.

The PMFBY, which was launched in April 2016 by Prime Minister Narendra Modi, aims to increase the crop insurance coverage in the country by charging very low premium from farmers and promising full payment of claims.

The government provides short-term crop loans up to Rs 3 lakh at a subsidised interest rate of 7 per cent per annum. An additional incentive of 3 per cent is provided to farmers for prompt repayment of loans within due date, making an effective interest rate for them at 4 per cent.

Recently, the government waived Rs 660.50 crore interest on short-term crop loans for November-December 2016 to provide relief to farmers who reeled under cash crunch on account of demonetisation.(Read More)

Budget 2017: After Health Minister’s warning, health budget likely to be up

Budget 2017 – India’s health ministry is likely to see a substantial increase in funding, after it warned that its programmes were short of cash and sought more than $1.2 billion in additional money, according to government officials and documents seen by Reuters.

The final numbers could change when Finance Minister Arun Jaitley presents the budget for fiscal 2017-18 on Wednesday. But one official familiar with the numbers said the health ministry is expected to get a $1.5 billion, or 27 per cent, increase in funding to around $7 billion.

The health and finance ministries did not respond to requests for comment.

An increase in the budget allocation, if finalised, would signal an acknowledgement from Prime Minister Narendra Modi’s administration that the country needs to ramp up spending on the sector.

Successive administrations have faced criticism from public health advocates for spending only around 1 per cent of India’s gross domestic product on public health, less in percentage terms than countries like Afghanistan and Sierra Leone.

More than a million Indian children die every year before reaching the age of five. Hundreds of millions of poor people rely on India’s public health programmes which provide basic services like vaccinations, disease prevention and free drugs.

Until May last year, Jagat Prakash Nadda, the union health minister, had publicly maintained that the sector had no funding issues but needed to get better at spending the money it had.(Read More)

Budget 2017 wish list: Young India expects lower fees, cheaper gadgets

Budget 2017 – Curtailment of education fees, cheaper electronic gadgets and more focus on jobs are some of the expectations Young India has from the Budget for fiscal 2017-18 that Finance Minister Arun Jaitley will table in Parliament on Wednesday.

Many students and professionals who spoke said they wanted a youth-oriented budget that will help underprivileged students pursue higher studies and cheaper electronic gadgets to make the government’s Digital India initiative a success in a country where almost 47.8 per cent of population is currently aged below 29.

With India set to account for 20 per cent of the world’s workforce in the next three years, many young men and women wanted the government to largely focus its resources on how to positively channelise the energy of the youth and make them more productive.

Ankit Mishra, a student pursuing MBBS in Varanasi, said: “I want the government to announce something that can benefit students. It is very difficult for many students who are not privileged to afford higher education fees.

“The fee structure should be normalised. Many times, brilliant students do not study further because of financial issues. That should remain the focus for Arun Jaitley,” Mishra said.

Alok Singh, a banker, expected the government to curtail taxes and present a “people-friendly” budget.

“It all depends on the taxation part. The government should seriously think about the common people now. The taxes on everything are so high that one is deprived of basic necessities at times. Already, commoners have suffered a lot due to demonetisation. This time, it should not add to their problems,” Singh, 28, said.(Read More)

Budget 2017 may look to soften note ban woes by tax relief

Budget 2017 Date – Finance Minister Arun Jaitley will on Wednesday present his fourth and perhaps the most challenging Budget that may look to soften blow of currency ban with tax and other sops as he seeks to revive growth.

While largely sticking to fiscal consolidation roadmap, Jaitley will present the Budget for 2017-18 amid strong headwinds caused by government decision to invalidate 86 per cent of the currency and newly elected US President Donald Trump making protectionist noises.

Topping the list of sweeteners could be the hike in Income Tax exemption limit to Rs 3 lakh from current Rs 2.5 lakh as the Minister will look at putting more money in hands of people to not just create a feel good atmosphere but also check the disruptive impact of demonetisation on demand, supply chains and cratered credit growth.

Alternatively, he may raise the deduction limit for interest paid on home loans to Rs 2.5 lakh from Rs 2 lakh currently. A higher medical rebate may also be on the cards.

Besides tax break, there could even be a universal basic income in the Budget, industry officials and tax experts said.

But cutting 30 per cent corporate tax rate to lift sagging investments may not be easy given that government’s official estimate of 7.1 per cent GDP growth for the current financial year does not take into account the chaos wrought by demonetisation.

While revenue collection targets for the current fiscal may exceed, there are doubts if Jaitley may project any substantial jump in tax receipts in 2017-18.(Read More)