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Business News/ Politics / Policy/  Recent initiatives may have set tone for Budget 2016
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Recent initiatives may have set tone for Budget 2016

Budget may increase investment, encourage entrepreneurs, facilitate ease of doing business, check subsidy burden

A file photo of FM Arun Jaitley. Photo: Pradeep Gaur/MintPremium
A file photo of FM Arun Jaitley. Photo: Pradeep Gaur/Mint

New Delhi: From measures to promote cashless payment for controlling tax evasion to a department of industrial policy and promotion (DIPP) panel suggesting third-party certification for ease of doing business, the Union government has announced a series of measures in the last few weeks that give a glimpse of what Monday’s annual budget may look like.

Ahead of finance minister Arun Jaitley presenting the Union budget for 2016-17, there are enough indications—including in the Economic Survey released on Friday—that Jaitley’s third budget will increase public investment, encourage entrepreneurship, facilitate ease of doing business and check the huge subsidy burden.

Besides these steps, the budget is also expected to focus on addressing distress in the agriculture sector. On 18 February, Prime Minister Narendra Modi said the government wants to cover 50% of all farmers under a new and revamped crop insurance policy that seeks to shield farmers from weather-related risks.

The new scheme, Pradhan Mantri Fasal Bima Yojana, approved by the cabinet on 13 January, aims to address rural distress resulting from back-to-back droughts in parts of the country in 2014 and 2015.

On Sunday, Modi approved the constitution of the bank board bureau aimed at revamping the functioning of state-run banks and appointed Vinod Rai, former comptroller and auditor general of India as its chairman. The bureau will appoint heads of state-run banks and aid banks in capital-raising and developing business strategies. It is an attempt to separate the functioning of banks from the government by creating another entity in the middle to act as a link between the two.

Another major decision announced earlier this week, was the cabinet nod for measures—short-term (to be implemented within a year) and medium-term (to be implemented within two years)—to promote payments through cards and other electronic means to check tax evasion and transition toward a cashless economy.

One effect of the measure will be that soon booking tickets on the Indian Railway Catering and Tourism Corp. website or paying water, telephone and electricity bills will not attract extra charge , like surcharge, service charge, convenience fee, if paid by card.

Last week, a DIPP expert panel recommended credible third party certification in most areas of government regulation to further promote ease of doing business in India. It said once the government allows third party certification, multiple players could emerge within a year’s time.

The government also notified on 17 February the Start-Up India policy which was unveiled by Modi in January 2016. Measures include a 2,500 crore annual fund for the next four years, self-assessment for three years and faster processing of patent applications. The government is also expected to announce tax incentives for start-ups and investments into start-ups in the budget.

The government is also looking at ways to control India’s huge subsidy bill.

The Economic Survey said that the well-off in India receive an implicit subsidy of more than 1 trillion and stressed the need to remove this anomaly.

Taking into account small savings schemes, tax/subsidy on cooking gas, railways, power, aviation turbine fuel, gold and kerosene, the survey said that though subsidies are meant for the poor, they are benefiting the relatively well-off.

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Published: 28 Feb 2016, 09:29 PM IST
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