Union Budget 2017: Here's How Analysts React
Finance Minister Arun Jaitley presented the Union Budget for the fiscal year beginning April 1 that increased spending on rural areas, infrastructure and fighting poverty, but keeping fiscal deficits in check. The FM made a large number of announcements to push the digital economy of the country in his Budget 2017 speech. After Prime Minister Narendra Modi announced “demonetization” on November 8, it doesn’t come as surprise that the current Budget further aims to strengthen the country’s cashless economy.
Here’s what analysts have to say on the Union Budget 2017:
Neutral Budget For IT Industry
“Budget 2017 is notable first for the fact that the government has maintained fiscal discipline and resisting the urge to come up with a populist budget given the upcoming elections in a number of states. So, this is not a ‘political’ budget, which was a big fear. The continued focus on moving India towards a more transparent and digital economy is encouraging, in order to really capitalize on the long term gains of the painful demonetization exercise. The moves to curb the black economy also bodes well for accelerated GDP growth as more of the ‘shadow economy’ becomes visible and integrated into the overall economic activity.
In another sign of the fact that the IT industry has become quite mature and does not need sops to continue its growth trend (other factors like Trump notwithstanding), there were no overt steps taken – and none expected – for the industry, and there is no hue and cry about it. In a sense it is a no-news is good-news story for the sector from a budget perspective.” - Partha Iyengar, VP and Gartner Fellow
Paves Way For Less Cash Economy
“Union Budget 2017 paves the way to Government’s aim of a less-cash economy, financial inclusion and Digital India. Launch of Aadhaar-enabled payment system without bank accounts, increase in Aadhaar enabled Point-of-sale (POS) machines, sops for POS machines and iris readers, Smart Aadhaar card for monitoring health of senior citizens, high-speed broadband for Gram panchayats are likely to strengthen the digital ecosystem of the country.”
Union budget gives further boost to Digital India. An additional outlay of Rs10,000 crore for BharatNet which offers high-speed broadband to rural India, creation of DigiGaon for telemedicine and education, Aadhaar enabled payments, use of ICT in education sector, focus on cybersecurity are encouraging steps for the telecoms sector.” - Prashant Singhal, Global Telecom Leader, EY
“Fiscal deficit of 3.2 percent is in-line with expectations. Bond markets or the debt markets will take it favourably. The quality of deficit has improved marginally.” - Devendra Kumar Pant, Chief Economist, India Ratings
Great Move Of FIPB Abolishment
“If FIPB (Foreign Investment Promotion Board) is abolished it really means that there would be no sector under the approval route and everything will be under the automatic route. I think that’s a great move. Even in sensitive sector like defense, where approval route is required, would be under the automatic sector in some shape or form. Effectively, there is no government approval required even in the sensitive sectors, which is a great development. It will clearly speed up the process.” - Amit Jain, Partner, M&A, Bmr & Associates Llp
Fiscally Prudent Budget
“India’s 2017-18 annual Budget is “fiscally prudent,” as it maintains the government’s fiscal consolidation efforts and would lead to stable economic growth if implemented correctly. However, the ratings agency would still need to see more evidence of the effectiveness of reforms to justify a change in its ratings stance,” said Marie Diron, associate managing director, Moody’s Investors Service told Moneycontrol.
Budget Overlooked Global Challenges
“From an overall ICT industry perspective the impact of budget 2017 is quite neutral. There were no major announcements that will help or adversely affect the industry. However, the plan to increase the budget allocation to Bharth Net from INR 2,700 crore to 10,000 crore is a very good move that will accelerate optical fibre network roll out in rural areas. It will not only improve the rural connectivity, but also will help in a long way in bridging the digital divide between the rural and urban areas. Moreover, the government’s initiative in promoting digital economy is a positive step which will help ICT industry in long run.
However, this budget turned a blind eye on the global challenges facing the IT Services industry, which was expecting some soothers from the government to help effectively compete at the global level. Increased infrastructure spend, reduced tax rates for MSME sectors and lowering income tax rates are a few other good initiatives that boosts consumer spend, which in turn will have a positive bearing on the IT and telecom industry” - Benoy CS, Director, Digital Transformation (ICT) Practice, Frost & Sullivan
(Image Courtesy: Pradhan Mantri Yojana)
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