ContextÂ
The Budget for this fiscal year is a balanced one which takes forward the work done in 2016-2017
Issue: Discussing the Union Budget
Positives
- Lowering of corporate tax rate: While the corporate sector would have liked to see the tax rate lowered across the board to less than the existing rate of 30%, it has been selectively done. There is still the assurance that in course of time the 25% mark would be delivered
- Lowering of income tax:Households should be happy that the income tax rate has come down effectively, which should help in increasing their spending level which was impacted quite decisively by the demonetisation move invoked in November.
Positive impetus should not be overstated
Author positive impetus must not be overstated for two reasons
- First is that the amounts involved are not very large, and hence while consumption will benefit from more purchasing power in the hands of the public, it would be on an incremental basis and concentrated on specific goods
- Second, for investment too, a sum of around ₹30,000 crore in incremental terms would be a fraction of the overall GDP of the country and hence while the impact would be positive, it may not be significant
Dominant role by private sector
The private sector has to play a more dominant role in enhancing investment, and this is probably where the Budget could have provided some focused benefits on corporate taxes to spur investment. Until this happens, it is unlikely that capital formation rate will get reversed
Conclusion
Author concludes by terming the budget as balanced in its approach
