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February 4, 2017

Understanding the implications of the Union budget 2017-18 – a three layer approach

Union Budget 2017-18

Union Budget is an important fiscal instrument by means of which the Government communicates about its methods of managing various economic resources for the development of country and welfare of people. Provisions for income and expenditure contained within the budget affects the economy, businesses, and the employment scenario.

Though considered as a regular ritual, the Finance Bill (Union Budget) presented by the Government of India in the parliament on 1st February 2017 was unique in four ways viz., (i) it is the first time that the Government has done away with the classification of expenses into “planned” and “non-planned” categories; (ii) The Railway Budget was merged with the Union Budget; (iii) The Budget date was advanced by a month and strict plan of action is put in place to ensure that the budget implementation starts from the beginning of the fiscal year i.e., 1st April, 2017; (iv) Vote on Account which used to permit the Government to spend money till the budget is passed by the Parliament is done away with.

In order to provide insights into the recently presented Union Budget 2017-18 with its four unique features and to facilitate the active understanding among the young students, a three-level intervention was made. At the first level, the PGDM students participated in the live telecast of the Budget Presentation by Union Finance Minister, Sri. Arun Jaitley on 1st February 2017; the second level called the students to recollect and submit a written assignment covering the salient points of Budget which they understood as well as those points that they did not understand. As the third and final level to facilitate the understanding, a panel discussion was organized by MATS Institute of Management and Entrepreneurship (MIME) on February 4, 2017.

Union Budget 2017-18
Union Budget 2017-18

The panel for the discussion comprised of Mr. Feneel Shah, Associate Director (SBU and Indirect Taxes), Price Waterhouse Coopers Private Limited; Mr. Sagar Nagaraj, Associate Director, B.S.R and Company, LLP; Mr. Biju Thomas, Partner, Malpan and Pai Chartered Accountants; Mr. Omar Abdullah S.M, Manager (Direct Taxes); Manohar Chowdhry and Associates; and Dr. Jitendra Kumar Mishra, Director, MIME who chaired the panel and moderated the discussion.

The panel discussion was set in motion by opening remarks by the Chairman of the panel which covered importance and interest shown by Indian public in the annual budget when compared to the other countries. The presentation of the budget is happening when the growth, in general, has slowed down, recent demonetization exercise and impending polls for five stage assemblies. These initial remarks set the context for the discussion. The panelists with their valuable insights covered the areas pertaining to “Likely Impact of GST on Government Earnings”; “Status of Fiscal Discipline”; “Encouragement to ‘Make in India”; “Agriculture and Rural Development”; “Tax Proposals”; “Schemes to Boost Demand and Supply”; “Impact on Quality of Life” and “Energy and Infrastructure. Later the panel discussion moved on to capture the expectations of different stakeholders and the budgetary response to the same. Budget provisions and allocations, and their implications with respect to Manufacturing Sector, Service Sector and Social Sector including Health and Education were discussed elaborately. The panelists threw light on the impact of the budget on Job Creation through Make in India initiatives. The panel discussion further proceeded to cover the impact of the budget proposals on investment and competitiveness of the industry.

Synthesizing their collective wisdom, the panelists unanimously recognized the sincere intention of the Government to improve the efficiency and effectiveness of the whole budgetary process. Further, the panel concurred on the extent of the impact of demonetization exercise, proposals for creating infrastructure for agriculture and rural development that in turn will have a long-term impact on the economy as a whole. On the front of ‘job creation,’ the panelists agreed that the Government has initiated entrepreneurship promotion measures and encouragement for corporates to promote job creation. However, as the saying goes: ‘the taste of pudding lies is in eating’. Therefore, keeping the dynamic nature of the economy in mind, the panelists were unanimous that the time will only tell how effective the Government is while implementing the budgetary provisions by eliciting active participation from the people.

The panel discussion was followed by the question and answer session wherein the students came up with interesting queries addressed to the panelists which in turn stimulated further thinking among students. This enhanced the understanding of macro aspects of Economy and Business, and their inter-linkages affecting the micro aspects.

The overall learning exercise was conceptualized by Prof. Reji Meprathe with the cooperation of Ms. Chaitra Vishweswara and Ms. Uma Devi.

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