Budget on "29th Feb 2016"

Today is a special day. Not just because it comes after 4 years but also because today our financial budget is released. So is it a budget that lives upto the expectations of this day?

Has the finance minister been able to account for political considerations and yet give us a good budget? The budget rightly focuses on building infrastructure, supporting farmers by continuing the schemes of last government, creating an ecosystem for start-ups, facilitating ease of doing business and increasing investment in higher education. Mr. Arun Jaitley has shown fiscal prudence by proposing to keep the deficit at 3.5 percent of GDP in 2016-17. He has tried to play a balancing act by sticking to the fiscal consolidation agenda and at the same time making a growth incentivizing budget. (The increased projection of revenue is expected from spectrum sale, disinvestment and increase in service tax rate.) Rightly, tax defaulters will be penalized more heavily now with increased focus on governance.

As is expected from a growth focused budget, this budget could increase inflation with the service tax rate increased to 15%. Restaurants, car, gold, travel and other services will now be more expensive. More taxes will be levied from people earning above 1 crore. Withdrawl from EPF after a certain limit has become taxable now. There are talks of doubling the rural income however no clear roadmap has been shown to achieve it. The budget also remains silent on boosting exports, increasing private investment and GST.

All in all, the budget tries to balance between growth and interests of poor. Within the political reality of today, the finance minister certainly had a difficult job in presenting a good budget and he seems to have done a good job at it.

However, if you ask me whether my expectations have been met then I would say that I am looking at a paradigm shift which our governments need to bring in the way they present budget with increased focus on outcomes and not just outlays. It is high time we move beyond good planning and focus on delivery too.