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Finance minister Arun Jaitley confronted the daunting challenge of aiding a recovery in new investments, growth and employment, without compromising macroeconomic stability. Photo: PTI
Finance minister Arun Jaitley confronted the daunting challenge of aiding a recovery in new investments, growth and employment, without compromising macroeconomic stability. Photo: PTI

Ten charts that summarize Budget 2017

A low revenue expenditure estimate and little action to address the bad debt problem clouds fulfilment of budgetary promises

The 2017 budget was presented in the backdrop of looming uncertainty in the global economy and a huge disruptive shock to the domestic economy after demonetisation.

Finance minister Arun Jaitley confronted the daunting challenge of aiding a recovery in new investments, growth and employment, without compromising macroeconomic stability.

Given the fact that assembly elections in five states are due in February and March and Gujarat goes to the polls in the latter half of the year, the budget was also expected to take care of the rural economy and middle classes hit by demonetisation.

It seems the budget has tried to address all these challenges. The fiscal consolidation road map seems to be intact. The government also intends to increase the share of capital expenditure. Jaitley claimed he has increased allocations for most social sectors as well as the rural economy. A scheme-wise analysis, however, shows there is a status quo of sorts on social sector spending.

Whether or not the government will be able to deliver on these promises depends on how the overall budgetary maths plays out in the next year. Higher oil prices might squeeze the government’s ability to raise taxes through the indirect tax route. Even direct tax collection estimate do not show the optimism which should have come with demonetisation-related black money discovery claims. Overall, tax buoyancy is expected to come down in the next fiscal year.

On the other hand, the budget assumes very low growth in revenue expenditure in comparison to last year. Similarly, not much has been done to address the problem of bad debt, which has become an impediment to revival of private investment. These two could play a spoiler in the government’s chances of meeting its budgetary promises.

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