The Budget process has finally begun, this time a month ahead of schedule, with the Halva ceremony at the North Block marking an auspicious beginning to an exercise that will see employees of the Finance ministry inside under tight security of the Delhi Police, CISF and the IB.
Inside the Finance ministry, employees will be printing what could be termed as the financial future of the country for the next one year. Outside the North block though, the whole country is waiting in anticipation.
Post demonetization, everyone has a set of expectations from the government – the salaried class wants tax rebate and the industry wants a discount in corporate taxes.
Amidst all this, NITI Aayog member Bibek Debroy claims that government must do good for the country.
"Government has to choose between comfort and long-term benefits and I'm sure Finance minister will end up the Budget speech by benefiting the country in longer run."
The aspirations and expectations of the people from the Budget are high – and understandably so. People have stood in long queues to deposit the junked currencies in their possession, and then again with a hope to withdraw their own hard-earned money.
There have been hardships – some extreme, others moderate – and the common folk expect that the government will reward them for their cooperation and patience in this gigantic exercise.
On the economic front, the sentiment is down to say the least. Economic activity has been lackluster and the industry has a long wish list it hopes to see fulfilled in the Budget.
Deputy MD of Sriram Group, Alok B Sriram believes it's payback time for the government after the huge sufferings for the industry during demonetization.
"Government should give rebate in corporate taxes as well as announce policies to boost jobs in the country. Lots of people have lost their jobs in the past two months. Announcement of positive measures by the government can help get employment back on track. This will also help the country in the longer period of time," he said.
As this moment, we can carry on threadbare discussing an endless list of things we would or would not like to see in the Budget. The truth, however, is that we can't change anything now. Budget printing has begun and the financial future of the country for the coming year is already being inked.
Still, an outlook is something that we may provide and pin our hopes on. The government’s revenue through taxes, by and large, stands at around Rs 16 lakh crore and our Budget is of Rs 20 lakh crore. The balance of Rs 4 lakh crore is managed by the government through the World Bank, Asian Development Bank and their likes in the form of loan.
The revenue of the government – besides its intent -- in many ways decides the investment in building infrastructure and the welfare measures it may take.
What makes this year’s case optimistic is that demonetisation will help the government not only meet its targets of tax revenue but will also leave it in a good position of excess.
Lots of unaccounted and idle money has come back into the system, of which around Rs 3.5 lakh crore to Rs 4 lakh crore is under scanner. Eventually, this money is also going to add up in the system.
There are also other reasons why one may choose to pin their hopes on this year’s Budget.
The government, in its bid to ensure transparency and plug leakages, has rationalised PDS schemes and introduced a subsidy mechanism through direct benefit transfers.
This should result in significant savings for the government which may translate into positive measures that we may see in the Budget.
Besides this, the government is also in discussions to implement a universal basic income scheme in the form of a monthly cash benefit of Rs 1,500 to individuals that fall in the Below Poverty Line category. The idea is to assure such individuals of a livelihood, boost consumption and in turn boost the economy.
The big question though arises out of the fact that providing 20 crore people Rs 1500 on a monthly basis requires a minimum annual fund to the tune of Rs 3,00,000 crore.
Where will the money to meet these needs come from?
Discussions are on from PMO to North Block to Niti aayog on this issue. Sources says the Finance minister might provide an insight into this scheme in his Budget speech, something that has made opposition parties wary before Assembly elections in five states.
All in all, the government is in a good position to spend more as compared to past years.
The coming Budget will be the Narendra Modi government’s second last full Budget before the 2019 Lok Sabha elections. Until now, the government has chosen to announce schemes from Make In India to Skill India that will only yield results in the long term.
The people though want to see some solid measures that provide immediate relief. In short, the government will need to win the hearts of the common man who suffered the most as a result of demonetization, stranded in line for two months to make the drive a success. In order to woo them, the government will need to dole out tax exemptions to middle class, provide incentives to the MSME and eradicate growing financial disparity in societies.
In this situation, especially given the expectations riding on them, the Union Budget of financial year 2018 is nothing short of a make or break for the Modi government.