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I am trying to write something for the benefit of my favorite community – ‘Professional Students’ (students pursuing professional courses). I personally feel students pursuing professional courses are not getting enough food for thought to understand their study curriculum at a macro level. I am taking this opportunity and budget timing to give completely a different stroke. A viewpoint on this will help Future CA, CMA and CS professionals in connecting their theoretical understanding to realities.

Getting the basics right - Economy and Budget 2015-16

A Macro picture starts at revenue collection in the form of taxes and appropriation of those collected funds by the Govt for various purposes including spending on social welfare schemes is the fundamental understanding. Below are the details to get a mental picture before we move forward.

Indian Gross Domestic Product (GDP) as on Oct, 2014 is about USD $2.047 Trillion [Comparing few countries: - India’s GDP USD $1.88 trillion in 2013, China’s GDP of $9.24 trillion in 2013, Japan’s GDP standing at $4.9 trillion in 2013 and USA’s GDP at $16.77 trillion (2013)]

(One Trillion is 1,000,000,000,000 (12 Zeroes) and multiply by INR60*approximately to arrive absolute rupee number)

There are many arguments that GDP measure alone is not an indicator of growth in quality of living of an individual in the country. Hence we should be checking “GDP per capita” and not “GDP”. USA GDP per capita is $53,041, Japan’s GDP per capita is $38,633, China’s GDP per capita is $6,807 and India’s GDP per capita is $1,499 (all in 2013).

Mind you, all these numbers are ‘nominal GDPs” and not “real GDPs” meaning, they are not adjusted with the inflation rates in respective countries.

Finance statisticians say Indian GDP Growth rate (2014-15) improved about 7.4%. You need not use your calculators but imagine what a change of 0.01% growth in GDP means in terms of absolute number.

I intentionally started this article mentioning GDP terminology as this is the highest level any finance discussion starts with before drilling it down.

As a professional student you have rarely come across detailed study about fiscal deficit, current account deficit, inflation, monetary policy etc. in your regular course of study. But I want you to have a fair idea of what these terms mean in general; these will help you understand and bridge the gap between macro to micro levels of economic perspectives. Well, why should you care understanding these terms? Please read on.

Union Budget 2015-16

Anyone would conveniently argue that India is unable to eliminate poverty because of so called middle men, revenue leakages, corruption and bureaucratic inefficiencies at various levels. Union budget focuses on many topics like state of our economy, growth (GDP)-inflation mix, Investments in infrastructure, capital markets, fiscal consolidations, tourism, make in India with skill in India, ease of doing business in India and Swach Bharat etc. etc.; However, I am focusing a little bit on “JAM” in this article considering its overall importance.

Tax Administration reforms commission (TARC) and Budget speeches 2013-14 and 2015-16 created a buzz word “JAM Trinity”, let’s explore this term as this will be standing tall for at least few more years. As mentioned by our Finance Minister, JAM is a game changing reform along with proposed Goods and Service Tax (GST).

Imagine what this ‘JAM Trinity’ would do serving the below poverty line (BPL) population making an allowance for the push given by central govt through these budget allocations. You may appreciate the fact behind this idea that direct benefit of cash transfers should only be the norm going forward.

In continuation of GDP details mentioned above, let’s imagine our union budget is trying to bridge the gaps within Indian economy to create sustainable growth in the country, create more jobs, eliminate poverty and improve the quality of living for every citizen of India. A question arises how can we do this? If our own banks are not able to fund the trillion dollar economy where do we get funding from and who are interested to invest in India’s growth?

It will be a long discussion if we want to continuously explore on economy and budget proposals. Let’s stop here and read on how a professional student should use the timing and text of budget for his or her own advantage.

Proposed Changes in Budget as a tool for developing “Analytical thinking”

Many resources will give you the required and more than enough gyan on changes in direct and indirect taxes or you may get this knowledge from a latest tax publication that you can buy from the market, so – Let me avoid writing about those changes and I am not touching the nitty-gritties of the tax law changes. My point is about giving a different perspective that should help your “professional thinking” as you are on the path to attain a professional qualification.

In general, a very first thing anyone would do after viewing budget speech or reading the fine print is concluding with a “Like” or “Unlike” (Facebook replaced dislike with unlike, so using this). Please remember, as a professional student you are not here to judge but analyse what and how the budget proposal creates an impact.

Everything is connected - “JAM Trinity” also revolves around few important proposed laws from this budget:

i. GST will be a reality from 1st April, 2016

ii. New Law to tackle black money parked abroad

iii. Benami transactions (prohibition) bill to curtail domestic black money

iv. New Bankruptcy law

v. Changes to PML and FEMA aligning curbing black money

Never look at budget speeches as a “one more” change to your direct and indirect tax study syllabus. It’s much more. Frankly speaking this is about economics and finance, Taxation is the last thing that happens in a budget because taxation is the by-product of steps taken on reforms. (For your easy understanding; imagine a tax department which is the sub-part of a finance department in an organisation) Always see the big picture when it comes to budget. As a student, you should be asking yourself the following questions.

a. What is the difference between reforms/growth oriented budget and populist budget?

b. How can the new laws help curbing black money and what will happen if “JAM” is not successful? What are the Pros and Cons of JAM?

c. Importance of GDP-Inflation figures in policy making? How can it be linked to revenues and taxation of corporates and individuals?

d. What would corporates do from the cash saving in gradual reduction of corporate tax over next 4 years? What if corporates re-invest that saving or what if shareholders take the cash home? Why DDT rate is untouched? Why there is no change in minimum alternate tax (MAT) as well?

e. Does Vodafone case show any effects on this budget?

f. What happens by reducing tax on royalty and fees for technical services from 25% to 10%? How would it help Indian growth story?

g. Why there is an increase proposed in Indirect taxes? Will it have any impact on proposed GST? How would it help the consumer?

h. What are the new terms in this budget, that India is not aware so far?

i. What happens to individual purchasing power (cash in hand) because of the changes in personal income taxation? Does an Individual have any cash left if he has to invest a fixed sum in the new schemes to reduce his tax payable?

These questions are only few examples giving food for thought; you can have as many as possible from this budget or from any budget for that matter, it can be industry specific too. I am not giving any answers here (this is not a solved scanner) I would suggest professional students invest some time and try answering those questions and discuss things with their friends and seniors. Also spend some time watching business news channels this month and read business articles from well-known business magazines touching on post-budget analysis and related topics.


Professional student – that doesn’t mean I should analyze budget that is presented every year. Well, there is a catch; you should care about analyzing the budget. Here is why!

Examination trends already proved you will not get silly and direct questions in any of the subjects (Expert knowledge levels). Dear friend, but you are going to become another member of a professional body. That’s where internship shall be taken seriously for professional courses.

If employers have to hire a candidate (whether professionally qualified or not) they would test ones analytical thinking more than their certified knowledge. If you want to start your own management consulting shop, first skillset that stands on top is your analytical skillset (An example being you should be in a position to connect that dots from “Global economy-GDPs-country’s budget-corporates-Individuals etc.,” i.e., Macro to Micro.

If not today, you will be reading new laws on bankruptcy and benami transaction (prohibitions) etc. sooner. CA students must already have observed why information technology is going to be removed and why ICAI wants its students to invest their energies on core areas. We can’t afford having sub-standard professionals at this juncture where India is throbbing for growth. Having a strong hold on the new subjects starting from initial days of its introduction can be your potential livelihood in future. Hence, budget analysis is the starting point. (Or it may help you spend lesser time if at all you encounter any future examination covering the new topics).

What I wanted to convey through this forum is that analyzing any budget with different questions and trying to get the answers will build your thought process in a different way. I am just trying to contribute towards cultivating a rich thinking mind in you. I am stressing on having a very quick understanding on the budget proposals and related changes which for sure helps you grow personally and professionally. You have to do this every year and please let’s start today.

All the very best!

(Please leave your valuable feedback)


Published by

CA KiranKumar.K
Category Career   Report

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