Analysis of Government budget of the financial year

2015-16

Union Budget 2015-16 is special as this is the first budget after the creation of
National Institution of Transforming India (NITI) and acceptance of 14th Finance
Commissions (FFC) recommendation of substantially higher devolution of Union
taxes to States. This Budget marks the beginning of the award period (2015-2020)
of the FFC during which States will be devolved 42% of the divisible pool of Union
taxes from existing 32%.

Deficits
Like most of the previous budgets, Indian Budget for 2015-16 too runs on deficit
financing. Revenue Receipts as per the budget is Rs.11,41,575 crore while
revenue expenditure is Rs.15,36,047 crore leading to a Revenue Deficit of
Rs.3,94,472 crore. Capital receipts figure as per the budget is Rs.6,35,902 crore
(including borrowings and other liabilities) while capital expenditure is
Rs.2,41,430 crore. Though the actual numbers are on a rise for most of the
deficits since 2014-15 (except for Primary Deficit), as a percentage of GDP Indian
Finance minister has managed to bring deficits down in compliance with the
FRBM (Fiscal Responsibility and Budget Management) Act.
Revenue Deficit: Rs.394472 crore (2.8 percent of GDP)
Effective Revenue Deficit: Rs.283921 crore (2.0 percent of GDP)
Fiscal Deficit: Rs.555649 crore (3.9 percent of GDP)
Primary Deficit: Rs.99504 crore (0.7 percent of GDP)

COMPARISON OF GOVERNMENT BUDGET OF THE

FINANCIAL YEARS 2015-16 AND 2016-17

Income Tax Slab

In the financial year 2015-16, the government had kept the IT slab
unchanged. During the financial year 2016-17, it decided to continue
with the earlier slab, but gave respite to the salaried person by raising
the ceiling of tax rebate to Rs. 5,000 from Rs 2,000 if taxable income is
less than 5 lakhs. Additionally, house rent paid under has been hiked
from 24,000 to 60,000 giving relief to people living in rented homes.
Increase in excise duty/service tax:
The FM in 2015-16 hiked the excised duty on cigarettes, tobacco
products, condensed milk, and peanut butter making them expensive.
In cigarettes, the excise duty was hiked by 15% to 25%. However,
excise duty for leather footwear costing above Rs. 1,000 was reduced
from 12% to 6% as well as for LED drivers.
In 2016-17, the FM has continued with the increase of excise duty by
10-15% for tobacco products, except bidi. Also excise duty of 1% has
been imposed on purchase of goods and services in cash exceeding 2
lakhs. Additionally, excise duty of 2% to 5% on branded garments will
effectively make them dearer. Aerated water and mineral waters will
also bear an excise duty of 18% to 21%.
In 2015-16, service tax was increased from 12.3% to 14% making
several services including eating out, cabs, mobile, DTH, beauty parlor
charges all expensive. In 2016-17, buying car has become expensive
with the introduction of 1% to 4% infrastructure cess depending on the
vehicle.
Surcharge on income of super-rich
Budget 2015-16 had increased surcharge for the super-rich with income
of more than 1 crore to 12%. This year, an additional surcharge of 3%
(total of 15%) has been levied to this category.
New home buyers:
First time home buyers can get an additional deduction of Rs. 50,000 on
a housing loan within 30 lakhs. Service tax exemption has also been
given for construction of affordable housing up to 60 sq. m. under state
and central housing schemes.
Corporate Tax:
Budget 2015-16 announced that the corporate tax rate will get reduced
from 30% to 25% over a period of 4 years. In keeping with the promise,
the government this year fixed the corporate tax for new
manufacturing units at 25% and proposed to lower the corporate IT
rate for small companies with turnover of less than Rs. 5 crore.
SC/ST businesses, women entrepreneurs:
In last years budget, the government had announced a Mudra bank to
provide boost to SC/ST entrepreneurs as well as women
empowerment. In this budget, FM Jaitley has allocated Rs. 500 crores
under the Stand Up India scheme giving boost to the SC/ST and women
entrepreneurs.
Tax on withdrawal of EPF deposits:
The Budget 2016 has made 60% of interest earned on employee-
contributed EPF corpus taxable, for all contributions made by
employees after 1st April, 2016. This is a major shift from a long-
running tradition of exemption at all stages on EPF and PPF, the latter
of which has remained tax-exempt.
Agriculture
In 2015-16, Rs 25, 000 crores were allocated for Rural Infrastructure
Development Bank. To support Micro Irrigation Programme, Rs 5300
crore were separately assigned and farmers credit-target was set at of
8.5 lakh crore. This year, Mr. Jaitley set the agriculture credit target at
9 lakh crore. He also announced the Paramparagat Krishi Vikas Yojana
to bring 5 lakh acres under organic farming and committed to bring
28.5 lakh hectares to be brought under irrigation and to reorganise
agricultural policy to double farmer income in 5 years.

GOVERNMENT BUDGET OF INDIA 2017-18

The 2017 Union Budget, presented by Finance Minister Arun Jaitley on

Wednesday, was broadly focused on 10 themes the farming sector,
the rural population, the youth, the poor and underprivileged health
care, infrastructure, the financial sector for stronger institutions,
speedy accountability, public services, prudent fiscal management and
tax administration for the honest.
Following are some of the highlights of the budget:
Demonetization
Demonetisation is expected to have a transient impact on the
economy.It will have a great impact on the economy and lives of people
. The effects of demonetisation will not spillover to the next fiscal.

Agriculture sector
Sowing farmers should feel secure against natural calamities. A sum of
Rs. 10 lakh crore is allocated as credit to farmers, with 60 days interest
waiver. NABARD fund will be increased to Rs. 40,000 crore. A dedicated
micro irrigation fund will be set up for NABARD with Rs 5,000 crore
initial corpus. Issuance of soil cards has gained momentum. A model
law on contract farming will be prepared and shared with the States.
Rural population
The government targets to bring 1 crore households out of poverty by
2019. During 2017-18, five lakh farm ponds will be be taken up under
the MGNREGA. Over Rs 3 lakh crore will be spent for rural India.
MGNREGA to double farmers' income. Will take steps to ensure
participation of women in MGNREGA up to 55%. The government
proposes to complete 1 crore houses for those without homes. The
country well on way to achieve 100% rural electrification by March
2018.
For youth
Will introduce a system of measuring annual learning outcomes and
come out with an innovation fund for secondary education.Focus will
be on 3,479 educationally-backward blocks.Colleges will be identified
based on accreditation.Skill India mission was launched to maximise
potential. Will set up 100 India International centres across the
country.Courses on foreign languages will be introduced. Will take
steps to create 5000 PG seats per annum.
Energy sector
A strategic policy for crude reserves will be set up. Rs. 1.26,000 crore
received as energy production based investments. TRADE infra export
scheme will be launched 2017-18.

ECONOMISTS TAKE ON GOVERNTMENT BUDGET 2017-18

REUTERS - India will ramp up spending on rural areas, infrastructure
and fighting poverty, Finance Minister Arun Jaitley said as he unveiled
his annual budget on Wednesday, adding the impact on growth from
the governments cash crackdown would wear off soon.
SAMRAT DASGUPTA, CEO, ESQUIRE CAPITAL INVESTMENT ADVISORS,
MUMBAI - He (Jaitley) focused on the rural side more, and he has
recognised that demonetisation had brought some hardship to people.
So hes trying to mitigate that as much as possible, with some rural
schemes and reduction in taxation for low income people.
VARUN KHANDELWAL, MANAGING DIRECTOR, BULLERO CAPITAL,
DELHI- The fiscal deficit bit does not seem very credible. Jaitley is
leaving room to exceed it at a later time. I think people will question
the fiscal math over the next few days.
TIRTHANKAR PATNAIK, INDIA STRATEGIST, MIZUHO BANK, MUMBAI-
The fiscal deficit of 3.2 percent missed the target, but laudable efforts
nonetheless. Markets should love the lower net borrowing figure of 3.4
trillion rupees.
DEVENDRA KUMAR PANT, CHIEF ECONOMIST, INDIA RATINGS, NEW
DELHI: Fiscal deficit of 3.2 percent is in-line with expectations. Bond
markets or the debt markets will take it favorably. The quality of deficit
has improved marginally.

SUMMARY
Through this project we get to know about the objectives, structure and
deficit of government budget. We also analyze the government budget
of the financial year 2015-16. Then, we compare the government
budgets of the financial year 2015-16 and 2016-17.
We also learn about the government budget of the financial year 2017-
18 and have economists comment about it.
CONCLUSION
India recorded a Government Budget deficit equal to 3.50 percent of
the country's Gross Domestic Product in 2016. Government Budget in
India averaged -3.86 percent of GDP from 1991 until 2016, reaching an
all time high of -2.04 percent of GDP in 1997 and a record low of -7.80
percent of GDP in 2009. Spending on education as a share of the central
government's total budgeted expenditure. Compared to 2013-14, the
last year of UPA, when education got 4.57% of the total expenditure,
there has been a steady decline 3.65% in 2016-17, according to
this Budget's revised estimate, with the estimated outlay for the
coming year showing a minor uptick at 3.71%. Looking at education
spend as a share of the GDP, which is what international trackers do,
the trend is clear having dipped from 0.63% of the GDP in 2013-14 to
0.47% projected by the government for 2017-18.
 BIBLIOGRAPHY

www.wikipedia.com
www.scribd.com
www.economicsdiscussion.com
www.nationmaster.com
www.clearias.com
www.thehindu.com
www.thetimesofindia.com
www.rbi.org