This year’s budget was expected to be a common man’s budget. It was only to be seen how Mr. Jaitley and his government would go about restarting the beleaguered economy after taking the toughest decision of demonetization, that brought the economy to a near standstill.
During his budget speech, the FM said that we are a non-tax compliant economy. Almost, 99 lakh people declare an income that is below Rs 2.5 lakh, 50 lakh people declare income above Rs 5 lakh and only 24 lakh people declare income above Rs 10 lakh. However, it is heartening to know that the demonetisation move has come up with various benefits for a common man.
We are taking a look at some of the things to understand how demonetisation and GST can benefit us:
Higher GDP Growth: One may wonder that how GDP can help a common man, but one should understand that GDP measures how fast an economy is growing. Quarterly growth is compared to measure the ongoing growth of the economy. As the economy grows, it directly impacts the growth of citizens. Growth in GDP will help in creating jobs. Arun Jaitley in his current budget announced various aspects of GDP like investments, consumption, government spending and said that current account deficit declined from .3% to 1 of GDP.
“In the aftermath of demonetisation drive, the union budget had fuelled our expectations to soar high. The budget 2017 focused on the overall theme of — Transform, Energise and Clean India (TEC India). Under TEC India, the government has introduced 10 different sub-themes to transform various sectors in India, energise & empower the youth, women and underprivileged sector. A GDP growth rate pegged at 6.75-7.5 per cent for 2017-18 is encouraging. The Finance Minister has ensured adherence to economic growth by targeting to keep the fiscal deficit to 3.2% of GDP,” says Yashish Dahiya- Co-Founder and CEO, Policybazaar.com.
Development of poor people: The government is going to increase the spending on infrastructure, rural economy, housing and agriculture which will help in making a better economy in the coming few months. This Budget has already followed several initiatives and has preserved its continuity since the beginning. Over Rs.3 lakh cr are being spent in the rural area, establishing gram panchayat in villages at a wider level to maintain and create harmonious growth in small villages. The FM also said, “The government is planning to double the income of farmers in the coming years”. And at least providing 100 days employment will be granted to farmers. Various spending has been done in regards to providing houses to poor people in rural areas.
Reducing lending rates: Demonatisation will help in decreasing the lending rates which help customers by providing housing loans at low rates. Various schemes are already launched by the prime minister earlier. “The reduction in holding period for land & building for computation of long term capital gain from 3 years to 2 years will spur the sale/purchase activity in the Real-Estate sector,” says Anil Chopra- Group CEO & Director, Bajaj Capital.
Job Opportunity: Whether in any of the sector, FM Arun Jaitley has focused on creating job opportunities which is a very good step keeping in mind that India’s major population consists of youth. He said in his budget that he has formulated various strategies to increase jobs in the public sector. Not only this he has also lowered the taxes of corporates to 25%, which means somewhere indirectly he wants to create jobs in private sectors too by lowering the tax burden levied upon them.
“It is surprising that those with an annual income of Rs. 1 crore or above will also get relief of Rs. 12,500. However, the biggest benefit will accrue to Small & Medium corporates whose annual turnover is less than Rs. 50 crore per annum as their Income Tax rates have been reduced from 30% to 25%. This will encourage entrepreneurship & growth of small business, and help in job creation,” says Chopra.
Promote higher investments: In his budget, the FM announced a new pension scheme for senior citizens with 8% guaranteed return (for 10 years) which will help provide some relief to retired people, especially during the current falling interest rate regime.
“On personal taxes, the 5% reduction in income tax rates for people earning below Rs 5 lakh will provide some relief for middle classes. As this segment has the highest Marginal Propensity to Consume (MPC), it may help boost consumer spending. Private investments through lower credits were one of the main criteria in his budget.
“Providing infrastructure status to affordable housing projects will encourage more builders/promoters to focus on this segment, thereby increasing the supply for the middle classes in the near future,” says Naveen Kukreja – CEO& Co-founder, Paisabazaar.com.
Digital payments & GST: The budget 2017-18 reflects the government’s continuous efforts to move towards less cash economy and bringing transparency in value chain through digital payments & GST. The digital transaction will also help in increasing the investments opportunity. BHIM and Aadhaar payments applications are coming up with bonus schemes. Aadhaar pay is also going to be launched who do not have a mobile phone, credit card or debit card. Aadhaar card users will get medical benefits and insurance benefit.
“The budget has stressed upon the importance of strengthening India’s digital economy by bringing down the cost of digital infrastructure. The acceleration of PoS infrastructure with 10 Lakh PoS machines by March 2017 and another 20 Lakh Aadhaar based PoS by September 2017 is a reflection of pushing digital payments at last mile by 300% from the current base of 15 Lakh PoS achieved so far in last 20 years. The decision to exempt duty on various POS machines will help in reducing a cost of digital infrastructure implementation and benefits companies like Oxigen.” says Pramod Saxena – Chairman & Managing Director, Oxigen Services Through the launch of GST, there may be a good news coming for people who like to watch movies on a big screen. Ticket prices may go down due to the standardisation in tax rates. “An industry that is audience led, with the GST finally getting implemented this April, ticket prices will go down by 15-20% which in turn will increase the demand and consumption by the audience. Overall, with the rollout of GST, access to digital media and a strong action against film piracy bring a lot of promise for the M&E Industry,” said Ranjit Thakur, Founder and CEO, Media Konnect.
The Financial Express, 3 February 2017