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On February 21, 2016 Swaminathan S Anklesaria Aiyar wrote in Times of India:

“Once the Budget was the biggest event in February. Now it is just another event, not even as important as a student rally in Jawaharlal Nehru University. No longer does the Budget spell out radical economic policy changes. It has become more routine and boring.”

But this time around the scenario is different, for the first time since independence, India will witness a merged budget i.e. Railway Budget and General Budget would be placed simultaneously. Expectation of the people and industry is quiet high from this budget as it comes almost after 3 months of demonetization. This is a make or break budget for Modi government as people are expecting some relief after demonetization and other reason is that no government in recent past had got such an opportunity to bring in big bang reforms. Though this government has proved its willingness to carry out the reforms but has to face dissent from the opposition on each and every step initiated by them.

President Sir in his speech praised government for taking bold steps like demonetization and surgical strike. Speech was more about highlighting the achievements of the social schemes including financial inclusion schemes of the government and efforts to expand & upgrade railways in north-east India.

Following are the synopsis from President Sir’s speech:

1. This is a historic session heralding advancement of budget cycle, merger of general budget with rail budget for first time in independent India.

2. An unprecedented 26 crore plus Jan Dhan accounts have been opened for the unbanked.

3. Over Rs 2 lakh Crore has been provided through 5.6 crore loans sanctioned under Pradhan Mantri Mudra Yojana.

4. With objective of digitization of all the live Kisan credit cards, 3 crore cards will be converted to RuPay card soon.

5. Interest rate for senior citizen has been fixed at 8 per cent monthly for a period of 10 year.

6. Corpus of NABARD fund increased to Rs 41,000 crore.

7. Universal Account Number has ensured portability of EPF accounts and has safeguarded the interest of crores of workers.

8. The Pradhan Mantri Ujjwala Yojana will make clean energy accessible to the poor.

9.  Over 1.2 crore consumers have given up their LPG connections.

10. 37 per cent of 1.5 crore beneficiaries of Ujjwala scheme to provide free LPG cylinder to the poor, belong to the SC/ST category.

11. Gas connections are being provided to 5 crore households.

12. 11000 of 18000 villages which were in darkness since independence electrified in record time.

13. Under Deen Dayal Upadhyaya Yojna, chain to empower women, from the deprived section, over Rs 16,000 crore has been made available to SHG.

14. After consecutive years of drought, farmer oriented schemes have been increased. 6 per cent increase has been seen from last year.

15. Soaring prices of pulses was the matter of great concern around this time last year, my government took proactive steps, it is now under control.

16. Package of Rs 6000 crore will boost employability of youth. And also add 1.1 crore jobs.

17. Minimum wages increased by 42 per cent, both agricultural and non-agricultural sector.

18. Through Stand up India initiative, over 2.5 lakh SC/ST women entrepreneurship launched with RS 490 crore.

19. Over 20 lakh youth have benefitted from the PMKVY.

20. Pradhan Mantri YUVA Yojana launched for promoting entrepreneurship education and training amongst 7 lakh student.

21. National Apprenticeship Promotion Scheme has been launched with a budget outlay of Rs 10,000 crore.

22. The four-decade old demand of OROP has been fulfilled. The financial implications could be of Rs 11,000 crores.

23. The implementation of 7th pay commission has benefitted 50 lakh employee and 35 lakh pensioners.

24. Railways have undertaken major expansion in North East region at the cost of Rs 10,000 crore. Tripura has been connected with broad gauge line and Arunachal Pradesh has been connected to Meghalaya.

25. Under Sabarimala program, 199 projects with outlay of 3 lakh crore has been identified for implementation over the next 3 years.

26. Metro rail projects sanction for four cities included to Nagpur, Ahmedabad and Pune with Chennai Metro expansion.

27. By year end, all the meter gauge tracks in the North East will be converted into broad gauge lines.

The speech was followed economic survey for the year 2016-2017. The following are the key highlights of economic survey.

1. FY18 GDP Growth seen in range of 6.75-7.5%

2. Three main downside risks to FY18 GDP growth forecast viz. i) Note Ban, ii) Oil Prices, iii) Global trade tension. [1]

3.  GDP growth rate at constant market prices1 for the current year i.e.2016-17 is placed at 7.1 per cent

4. Agriculture sector to grow at 4.1 per cent in the current year up from 1.2 per cent in 2015-16

5. Growth rate of the industrial sector estimated to moderate to 5.2% in 2016-17 from 7.4% in 2015-16

6. The eight core infrastructure supportive industries, viz. coal, crude oil, natural gas, refinery products, fertilizers, steel, cement and electricity registered a cumulative growth of 4.9 per cent during April-November 2016-17 as compared to 2.5 per cent during April-November 2015-16. The production of refinery products, fertilizers, steel, electricity and cement increased substantially, while the production of crude oil, natural gas fell during April-November 2016-17. Coal production attained lower growth during the same period.

7. Service sector estimated to grow at 8.9% in 2016-17

8. CPI based core inflation has remained stable in current fiscal year averaging around 5 %

9. On balance, there is a likelihood that Indian economy may recover back to 6 per cent to 7 per cent in 2017-18

10. Inflation based on Wholesale Price Index (WPI) averaged 2.9 per cent during April-December 2016

11. The decline in Fiscal Deficit[2] has continued to 3.5 per cent of GDP

12. Current account deficit (CAD) narrowed in the first half (H1) of 2016-17 to 0.3% of GDP

13. In H1 of 2016-17, India’s foreign exchange reserves increased by US$ 15.5 billion on BoP basis.

14. India’s trade-GDP ratio is now greater than China’s

15. Excise related taxes to fall around 0.1% of FY18 GDP

16. Need to modify operational framework of FRBM Act

17. Economic Survey recommends reforms in labour and tax policies to make the Apparel and Leather sector globally competitive

18. Sharp rise in prices in FY18 may cap monetary easing headroom

19. Lower interest rates in FY18 will boost economy

20. See fiscal windfall from PM Garib Kalyan Yojana

21. On balance, there is a likelihood that Indian economy may recover back to 6 per cent to 7 per cent in 2017-18

22. Economic Survey 2016-17 suggests setting up of a centralized Public Sector Asset Rehabilitation Agency

23. Size of Indian public sector both in micro-efficiency terms and in a macro-fiscal sense is not large

24. Property Tax can be tapped to generate Additional Revenue at City Level

25. Advocate reforms to unleash economic dynamism and social justice

26. Universal Basic Income (UBI) Scheme an alternative to plethora of State subsidies for poverty, advocates reforms to unleash economic dynamism and social justice

27. Universal Basic Income that reduces poverty to 0.5% would cost 4-5% of GDP if top 25% don't participate

28. Digital Radio platform to promote Digital and Connectivity revolution in the Country

29. Inflation is repeatedly being driven by narrow group of food items, pulses being major contributor of food inflation

30. Economic Survey sees fiscal windfall from Pradhan Mantri Garib Kalyan Yojana, low oil prices

31. India has an opportunity to push leather and apparel exports

32. The past year witnessed a number of legislative accomplishments, including GST

33. Fiscal gains from Goods and Services Tax will take time to realize

34. UPI can unleash the power of mobile phones in achieving digitalization of payments & financial inclusion.

35. Credibility will be strengthened if demonetization is accompanied by complementary measures

36. Demonetization has short-term costs but has potential for long term benefits

37. Remonetization to eliminate cash crunch by April 2017

38. Economic Survey says demonetization led to job losses, decline in farm incomes, social disruption, especially in cash-intensive sectors

39. Demonetizations led to an increase in uncertainty leading to firms and households postponing purchases

40. Average real estate prices in 8 major cities which were on a decline fell further post demonetization

41. Demonetization cash squeeze to be completely eliminated by April 2017 unlike February that many spoke about

42. Government made considerable efforts to reduce subsidies in petroleum in past two year

43. Major challenge to re-establish private investment, exports as drivers of growth; reduce reliance on Government, private consumption

44. Redistributive Resource Transfers (RRT) should be significantly linked to fiscal and governance efforts on the part real per capita GSDP between 1983 and 2014, shows across-the-board improvement: Economic Survey 2016-17

45. Labour migration in India increasing at an accelerating rate, reveals new study: Economic Survey 2016-17

46. Economic Survey, however, predicts that it 'Should gradually stabilize as the economy is remonetized.

47. Chief Economic Adviser Arvind Subramanian says: "This document is just the first installment, it's going to be as big sometime in summer."

Comments on Economic Survey:

Economic survey showed the mixed impact of demonetization on the economy and somewhere tried to give an assurance that cash flow would be restored by April 2017. The GDP growth forecasted for FY 2018 is on a lower side due to certain negative impact of demonetization on the economy. Agriculture sector is estimated to show positive growth along with service sector whereas estimates shows that industrial sector may see a decline. Government has been successful in bringing down the fiscal deficit and this time around they might maintain the trend. Another positive is that Current Account Deficit has narrowed down in the first half of the FY 17. Apart from this Economic Survey do suggests certain important reforms apart from implementing GST to keep the growth story of the country on right track.

[3] Following are the Comments from Some expert on the Economic Survey:

1. Richard Rekhy, CEO, KPMG in India on Economic Survey 2016-17:

The Economic Survey has signalled that the Indian economy is on a stable growth path, projecting a growth between 6.75 and 7.5 per cent for 2017-18. The range comes due to uncertainties in the world, including protectionist tendencies. While demonetisation’s short-term negative impact has been acknowledged, its long-term benefits have been highlighted, particularly in terms of digitization, tax compliance and revenues. The survey, points to a likely bold and reformative budget, which will have a strong focus on infrastructure, employment generation and easing business conditions. The issue of NPAs is most likely to be addressed coherently, along with taking stock of the PPP logjams. The survey scores on recognizing the economy’s shortcomings, prescribing the required action and setting an optimistic and expectant tone for tomorrow’s budget.

2. FICCI President Pankaj Patel:

To reap the long-term benefits of demonetization, there is a need to have follow-up actions such as providing a boost to demand, lowering of tax rates, widening of tax base and reforming the tax administration. We hope that the Union Budget to be presented tomorrow will include measures in these areas.

3. Assocham President Sunil Kanoria:

The Survey has rightly picked up the potential risks to the global economy and its impact on India in the form of higher oil prices, trade tensions from sharp currency movements and geopolitical factors. An upsurge in protectionism that could affect India’s exports, is surely a matter of concern.

4. CII Director General Chandrajit Banerjee:

We are hopeful that the Budget to be presented tomorrow would deal with the aspects of creating demand, especially through direct tax interventions on the personal income tax and corporate taxation side.


As I had mentioned in the initial part of my article that this survey raises the hopes of masses that budget will be pro people budget or one can say that it will be reward from government to the citizens for supporting the demonetization. But everything lies in the future and in the brief case of Mr. Finance Minister.

Courtesy: CS Bhavin Nilesh Pandya

  • [1] Gross domestic product (GDP) at market prices reflects the production activity of resident producer units (i.e. industries). It is equal to the economy's total output of goods and services at market prices, plus taxes minus subsidies on imports.
  • [2] Fiscal Deficit - The difference between total revenue and total expenditure of the government is termed as fiscal deficit. It is an indication of the total borrowings needed by the government. While calculating the total revenue, borrowings are not included.
  • [3]


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