New Delhi: Finance Minister Arun Jaitley has confirmed in a tweet that he will present the Union Budget at 11 this morning, ending speculation on since Wednesday morning on whether it would be postponed for a day after Lok Sabha member and former union minister E Ahamed died last night. Parliament is usually adjourned for a day after a sitting member dies, and the Congress and other opposition parties had suggested that precedent be followed. Mr Jaitley left his office on schedule this morning, holding the brown Budget briefcase, and has met the President. “Watch me live presenting the Union Budget 2017 at 11 am, February 1, 2017,” the Finance Minister tweeted.
Stock markets opened higher on Wednesday anticipating big announcements from the Finance Minister to support the economy after November’s notes ban. This is Mr Jaitley’s fourth Budget and the first after demonetisation.
Mr Jaitley is expected to boost spending and ease back on cutting the fiscal deficit, as he seeks to lift growth which has been hit by Prime Minister Narendra Modi’s notes ban. The move, aimed at eliminating black money, took out 86 per cent of the county’s cash in circulation, hitting consumer demand, disrupting supply chains and hurting capital investments.
The government has said in its report card, the Economic Survey, that growth could dip to as low as 6.5 per cent in the current fiscal year ending March, before picking up in the next fiscal year to between 6.75 and 7.5 per cent.
Arvind Subramanian, Mr Jaitley’s Chief Economic Adviser, on Tuesday advocated slashing personal income tax and accelerating cuts in corporate tax rates. He cautioned, however, against pursuing debt-fueled fiscal expansion.
Economists predict a fiscal deficit of 3.3 per cent of the GDP for 2017/18. That would be higher than the 3 per cent pledged earlier but lower than 3.5 per cent that the government has budgeted for the year soon to end. Rating agencies will not be kind.
The Railway Budget has been merged with the Union Budget, which has been advanced by almost a month for the first time. Opposition parties have alleged that the government made the change to be able to offer sops before elections in five states.
“Signs of a populist budget will be positive for markets, but if accompanied by a larger-than-expected borrowing programme will quickly reverse sentiment,” said Radhika Rao, an economist with DBS Bank in Singapore.
With the Goods and Services Tax (GST) set to be rolled out from July, Mr Jaitley is not expected to tinker much with excise duties. However, he could raise the service tax rate from the current 15 per cent to align with the higher GST rate.
Though the currency in circulation has largely normalised, the impact from demonetisation is likely to linger over the next few months, says global financial powerhouse Morgan Stanley. This will make revenue and tax projections a tough task, say economists.
The rollout of a nationwide Goods and Services tax (GST), expected in July after years of delays, could also weigh on economic growth. Countries that have introduced GST in the past have often faced a relative economic slowdown before the benefits of a unified tax regime feed through.