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1. Budget 2017-2018

  • Historically it is just a proposed balance sheet, and government used it to present it on 1st March

  • Budget is an obligation the government of India under article 112, 113, 114(3) and 110(a).

  • This year three major changes have been undertaken in budget:

  • Rail budget is merged with Union Budget

  • Presentation of budget is preponed by a month

  • It has done away with plan and non plan expenditures

 

Two policy decisions that precede Budget

  • Demonetisation

  • Passing of GST bill

  • Budget 2017 is based on ten themes based with a goal to “Transform, Energize and clean India”

  • Farmers- for whom the budget has committed to double their income in five years

  • Rural population- providing employment and basic infrastructure

  • Youth- energizing them through education skills and jobs

  • Poor and unprivileged: strengthening the system of social security and affordable housing

  • Infrastructure for efficiency: productivity and quality of life

  • Financial sector: growth and stability through stronger institutions

  • Digital Economy for speed, accountability and transparency

  • Public service: effective governance and efficient service delivery through people’s participation

  • Prudent fiscal management

  • Tax administration: Honouring the honest

 

2. Swot Analysis Of The Indian Economy

2.1. Strengths

  • Indian economy still presents bright support with growth prediction of 6.5-6.75%

  • FDI reform measures have ensured that India has been receiving largest inflow of FDI investment

  • The large gap existing between the inflation rates measured through WPI and CPI in 2015-16 has been bridged now and the relative prices in economy has been stabilized

  • Successful demonetization of high value currencies is likely to yield long term benefits like reduction in corruption etc

  • GST has been passed which will provide single market

  • India’s share in world manufacturing exports is rising because the country has remained competitive despite of high capital inflows and inflation

  • Internal mobility of goods given by interstate trade in India is about 54% of GDP or 1.7% of international trade

  • In terms of commitment to climate India is on positive side

 

Advantage of demography

  • A very extensive network and infrastructure is created in the country of JAM

  • There is convergence of health outcomes like life expectancy and fertility rates across states over time in country

  • Indian economy has the potential to grow at 8-10% in real terms

  • Acknowledged democracy, good governance and established decision making process

 

2.2. Weaknesses:

  • A major weakness of economy in context of its potential is broad societal ideology, mindset and opinions about redistribution of income and wealth, capacity building for service delivery and curious and confusion about property

  • Even GST implementation to begin with is likely to suffers from sub optional design and too complicated

  • Confusion regarding working and role of public and private sector

  • Efficient delivery of major services is inefficient

  • Private investment is low and exports are no longer growing at high rates

  • Corporate sector and commercial banks are caught simultaneously with their respective stressed balance sheets

  • Non tax revenues of central government have not achieved the target because receipts from the spectrum, disinvestments and dividends to the government

  • Fiscal deficits in the state government budgets have been rising late

  • Heavy reliance on high growth rate of income to reduce debt- GDP ratio rather than reducing primary deficit has not yielded the desired result

  • Distribution of public funds for various schemes

  • Ratio of working to non working population

  • Investments and saving rates have been declining

  • Income and consumption inequalities across states.Opportunities:

  • Reform of bankruptcy laws for exits of corporations to release locked up resources

  • Strengthen legal basis for Aadhar cards and allow inter operability to encourage payments for efficient functioning of government schemes to achieve inclusion and equity

  • Focus and competitive and cooperative federalism presents a great potential to attract skills, investment and technology

  • Unfinished agenda on structural reforms

  • Rising dollar on account of developments in the US economy could compel Chinese to reduce its exports

  • Higher growth prospects in advance countries in advance countries like US and Germany can lead to revival of exports from developing countries

  • India has opportunity to sign attractive agreements with UK and Europe after BREXIT

  • Relevance of WTO and other multilateral aggrements to increase

  • There is an opportunity to create a public sector Public sector asset rehabilition agency to address the twin balance sheet problem

 

Threats:

  • International rating agencies have not been consistent in upgrading their ratings of different countries

  • Competitive populism in federal democracy can damage fiscal discipline and governance standards

  • International political order and environment are fast changing towards isolationism and protectionism

  • International oil prices are on rise and so also commodity prices

  • As a consequence of developments in US economy, global interest rates and inflation in advanced countries

  • If rising dollar on account of developments in US economy results in dollar induced depreciation in Yuan

  • World’s exports to GDP ratio has been declining for last 6 years

 

3. “RAIL BUDGET IN NEW AVATAR

  • Acworth. Based on its recommendations railways budget was separated in 1924

  • Rail budget has been absorbed in General Budget but the budget has ensured that financial autonomy of Indian railways

  • Transport integration is clearly visible as railways are required to implement end to end integrated transport solutions for selected commodities

  • Present budget mandates ra•In 1920, an East Indian Railway committee was constituted under chairmanship of Sir William ilways to focus on major 4 areas

  • Passenger safety

  • Capital and development works

  • Cleanliness

  • Financing and accounting reforms

  • Passenger safety

  • Upgrading safety

  • b) Special Railway Safety Fund was created on April 1, 2001. It was targeted to wipe out accumulated areas of over aged assets. It was non lapsable and non interest bearing fund of Rs. 17000 crores

  • The identified works were listed in a book called ‘Green Book’

  • d) In this budget government announced setting up of Rashtriya Rail Sanraksha Kosh with a corpus of Rs 1 lakh crore over period of 5 years with clear cut guidelines and timeline for implementing various safety works to be funded from this Kosh

  • Plan for complete replacement of Integral Coach Factory design coaches by modern LHB

  • Budget has outlined complete elimination of unmanned level crossing by 2020

 

Capital and Development Works

  • Gross budgetary allocation has been increased

  • Budget targeted commissioning of 3500 km of railway line in 2017-18

  • Process of ‘Station Redevelopment’ has been launched. Process has already started Habibganj near Bhopal and Gandhinagar

  • Railways shall be setting up joint ventures with 9 state governments

 

Cleanliness:

  • Swachh Rail project under Swachh Bharat Abhiyan

  • SMS based Clean my coach service has gained popularity

  • Coach Mitra facility a single window interface to register all coach realted requirements

  • Proposes to fit all coaches with bio toilets by 2019

  • Environment friendly disposal biodegradable waste into energy are being set up at New Delhi and Jaipur Railway Stations

 

Finance And Accounting Reforms:

  • a) Key advantage of accrual basis is that matches revenue with related expense, so that complete impact of a business transaction can be seen within a single                            reporting period

  • IRCTC to promote digital ticket booking

  • Three railway PSU’s- IRFC, IRCON & IRCTC are proposed to be listed in Stock exchange

 

4. Budget And Infrastructure

4.1.Transport:

Roads:

  • a)Budget allocation has increased i.e. 27% of total allocation to transport sector

  • b)A specific programme for development of multi modal logistics parks, together with multi modal transport facilities will be drawn and implemented

  • c)PM Gram Sadak Yojana is being implemented at accelerated pace

  • d)With notable exception of NHDP the major focus of this network expansion has been to improve connectivity rather than to increase network capacity

 

Airports:

  • a)Airports are being modernized and expanded

  • b)A substantial investment will be required to ensure that the Air Navigation Services (ANS) can continue to deliver safely

 

Shipping:

  • a)Indian ports are highly constrained for capacity and are likely to remain in near future

  • b)Inland Water Transport (IWT) is one of the most environment friendly mode with excellent fuel efficiency and lower emission levels

 

Communication:

  • a)Telecom sector is an important component of infrastructure ecosystem

  • b)A scheme which is a project of national importance is called Bharat Net, a highly scalable network infrastructure on non discriminatory basis

  • c)Optical fibre cable has been laid in 1,55,000 kms.

  • d)In addition ‘DigiGaon’ initiative will be launched to provide tele-medecine, education and skills through digital technology

 

4.2. Energy:

Power:

  • a)100% village electrification by 1st May n2018 under DDUGJY

  • b)Solar energy, is now proposed to take up the second phase of solar development park

  • c)An eco system is also being created to make India a global hub for electronics manufacturing

 

Oil and Natural Gas:

  • a)Petroleum and natural gas sector has the tremendous amount of scope for expansion and job opportunities

  • b)Strengthening the enegy sector, the government has decided to set up strategic crude oil reserves

 

5. Budget And Agriculture

5.1.Budget and Rural Welfare:

Better Value for Agri Products

  • a)The coverage National Agricutural Market (e-NAM) will be expanded from current 250 markets to 585 APMCs

  • b)e-NAM helps leverage the physical infrastructure of mandis through an online trading portal

  • c)programme aimed at 21 mandis in 8 states- UP (6), Gujarat(3), Telengana(5), Rajasthan(1), MP(1), Haryana(2), Jharkhand(1), HP(2)

  • d)Government  has declared that dedicated micro-irrigation fund will be set up by NABARD to achieve the goal of ‘Per Drop more crop’

  • e)Fund allocation under PM Fasal Bima Yojana’ has been increased

  • f)Government set up new mini labs in Krishi Vigyan Kendras and ensure 100% coverage of all 648 kendras

  • g)It will undertake a Mission Antyodya to bring 1 crore households out of poverty and to make 50,000 Gram Panchayats poverty free by 2019

  • h)Timing has been linked to 150th anniversary of Mahatma Gandhi- under part of Gandhi Darshan

  • i)Initiative to geo-tag all MGNREGA assets and putting them in public domain will establish further greater transparency

 

Budget and Agriculture:

  • Healthy growth rate of 4.1% from drought reduced growth rate of 2% in 2015-16

  • Various government schemes like PMKSY, PMFBY and e-NAM to increase income of farmers

  • Budget also stipulates that that a model law on contract farming would be prepared and circulated among states

  • Soil Health card scheme would be strengthened further

  • Setting up of Krishi Vigyan Kendras for soil testing

  • Sum of Rs. 2000 crore has been allocated for new Dairy and Infrastructure Development Fund under NABARD

 

6. Budget And Skill Development

  • India’s more than 60% population is below the age of 35 and average age by 2020 will be about 29

  • Challenge is to provide education, skills and gainful employment

  • Rural India has three important concerns- all access is limited, resources are very few and most important is education concerns

  • Education is to play major role in Transforming India and Digital technology is one aspect in it

  • The budget has introduced a system of measuring annual learning outcomes in schools provided for an ‘Innovation, Fund for secondary education’ which proposes to encourage local innovation

  • Autonomy for higher institutions

  • Government has put system to develop SWAYAM platform by leveraging IT and plans to launch it with at least 350 online courses

  • Budget also proposes a National Testing Agency to be set up as an autonomous and self sustained premier testing organization to conduct all entrance exams for higher education institutions

  • Vocational Education and training (VET) is an important element of nations education initiative

  • Budget has extended the Pradhan Mantri Kaushal Kendras to more than 600 districts across the country

  • Proposes to set up 100 International Skills centres across and across the country

  • Launch SANKALP- Skill Acquisition and Knowledge Awareness for livelihood promotion programme at cost of Rs 4000 crores

  • Announcement to Strengthen Skills for Industrial Value Enhancement (STRIVE)

 

Some major statistics

  • a)In 2012, 474.1 million workers next to China

  • b)More than 94% work in unincorporated, unorganized enterprises

  • c)Organized sector includes workers employed by Government, state owned enterprises and private enterprises

  • d)60% workforce self employed

  • e)Of remaining 40% nearly 30% are casual workers while only 10% as regular employees

  • f)India has one of the lowest levels of per capita income and productivity

  • g)Around 55% of population dependent on agriculture

  • Product diversification, manufacturing of new products and by products without proportionate rise in capital and material and more importantly, large scale adoption of new technology can result in employment gains

  • Non agricultural investment and growth located largely in the urban areas are likely to suffer raising the urban unemployment rate and underemployment

  • Rural sector unemployment is also feared to rise because given that the agriculture sector is not in a position to absorb labour significantly, many of them take recourse to rural non farm sector where business requires cash on day to day basis

  • Highest ever all allocation to MNREGA

  • PMEGP is basically a credit linked subsidy programme which combines Rural Employment Generation Programme (REGP) and Pradhan Mantri Rozgar Yojana (PMRY)

  • PM Kushal Kendras will be set up

  • Concept of India International Skills Centres (IISC) to be established across the country is really interesting as these centres will offer advanced training courses in foreign languages

 

7. Budget And Health

  • Nearly 59% of health budget gets transferred to states/ UTs under centrally sponsored schemes viz. NHM and National health protection scheme

  • Central sector schemes which include PM Swasthya Suraksha Yojana which deals with setting up of AIIMS like institution and upgradation of medical college institutions

  • Human Resources for health and medical education received the highest increase in Budget

  • NRHM continues to receive the highest allocation in health budget nearly 45% of total allocations made to family of Health

 

National Health Protection Scheme (NHPS):

  • a)PM had confirmed that the government was working on scheme to provide health insurance cover of up to Rs 1 lakh to the poor

  • b)A scheme of cash transfers of Rs 6000 to an expectant mother for promoting institutional deliveries and immunization as well as the ambitious target set for elimination of Kala Azar and Filariasis by 2017, Leprosy by 2018, Measles by 2020 and Tuberculosis by 2025

  • c)FM announced transforming of health sub centres (SCs) across the country into Health and wellness centres

 

8. Budget And Weaker Section

  • Budget aims at energizing various sections of society, especially the vulnerable sections with the larger objective of unleashing their true potential and improving quality of their life

  • Some allocations for minorities and weaker sections:

  • Divyangs dealt by nodal Department of Empowerment of Persons with Disabilities are other social groups

  • PM Awas Yojana- Rural for affordable housing

  • Free LPG connections to poor households as successful for rural women PM Ujjwala Yojana

  • Inculcating entrepreneurship skills among Scand ST under Stand Up India

  • Launching next phase of STRIVE at cost of Rs 2200 crore to improve quality of market relevant vocational training

  • SANKALP programme

  • A dairy Processing and Infrastructure Development Fund would be set up in NABARD

Yojana March 2017

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