On 1st February 2017, Shri Arun Jaitley, the Hon’ble Finance Minister of India presented Union Budget 2017, to set out the government’s policies for the next year. This follows the Economic Survey presented on 31st January in the Budget Session of the parliament.
Union Budget 2017-18 – RBI Grade B Phase 2
Union Budget 2017-18 – RBI Grade B Phase 2
Major Reforms in Union Budget 2017-18
Advancement of date of presentation of budget from last week of February to 1st February.
Merger of Railway Budget with the union budget. Its a historic step as for the first time after 92 years railway budget was presented along with union budget.
Abolition of plan and non-plan expenditure.
Finance minister Arun Jaitley mentioned that Government’s agenda for the next year is – “Transform, Energize and Clean India”, that is, TEC India.
He also mentioned that Budget will be focused on the following major themes –
Farmers, Rural population, Youth, Poor and underprivileged health care, Infrastructure, Financial sector for stronger institutions, Speedy accountability, Public services, Prudent fiscal management, Tax administration for the honest.
Key points in Union Budget Related to Financial and Banking sector
The total expenditure in Budget for 2017-18 has been placed at Rs. 21.47 lakh crores.
Allocation for Capital expenditure has been stepped up by 25.4% over the previous year.
Provision of Rs. 3,000 crores under the Department of Economic Affairs will be made to implement various Budget announcements.
Fiscal deficit for 2017-18 pegged at 3.2 percent of GDP and its target for next three years pegged at 3 percent.
Revenue Deficit of 2.3% in 2016-17 stands reduced to 2.1% in the Revised Estimates. The Revenue Deficit for next year is pegged at 1.9%.
Consumer price index inflation is expected to remain within the central bank’s mandated range of 2 to 6 percent.
No transaction above 300,000 rupees to be permitted in cash.
For the financial year 2017-18, the target for agricultural credit to farmers has been fixed at a record level of Rs. 10 lakh crore with 60 days interest waiver.
Government will support NABARD for computerization and integration of all 63,000 functional PACS (Primary Agriculture Credit Societies) with the Core Banking System of District Central Co-operative Banks which will be done in 3 years at an estimated cost of Rs. 1,900 crores, with financial participation from State Governments.
A Long Term Irrigation Fund has already been set up in NABARD. Addition of Rs. 20,000 crores to its corpus was also announced which will take the total corpus of this Fund to Rs. 40,000 crores.
Micro Irrigation Fund will be set up in NABARD to achieve the goal, ‘per drop more crop’ which will have an initial corpus of Rs. 5,000 crores.
A Dairy Processing and Infrastructure Development Fund would be set up in NABARD with a corpus of Rs. 8,000 crores over 3 years. Initially, the Fund will start with a corpus of Rs. 2,000 crores.
The National Housing Bank will refinance individual housing loans of about Rs. 20,000 crore in 2017-18
Foreign Investment Promotion Board (FIPB) will be phased out in 2017-18 and a roadmap for the same will be announced in the next few months.
A Computer Emergency Response Team for Financial Sector (CERT-Fin) will be established.
In lines with the ‘Indradhanush’ roadmap, Rs.10,000 crores for recapitalisation of Banks will be provided in 2017-18. Additional allocation will be provided if required.
Lending target of Pradhan Mantri Mudra Yojana will be set at Rs. 2.44 lakh crores for 2017-18.
125 lakh people have adopted the BHIM app so far. The Government will launch two new schemes to promote the usage of BHIM – Referral Bonus Scheme for individuals and a Cashback Scheme for merchants.
A Mission will be set up with a target of 2,500 crore digital transactions for 2017-18 through UPI, USSD, Aadhar Pay, IMPS and debit cards.
Proposal to create a Payments Regulatory Board in the Reserve Bank of India by replacing the existing Board for Regulation and Supervision of Payment and Settlement Systems has been introduced.
Finance Commission is constitutional body. Its provisions are mentioned in Article 280 of Constitution. It is constituted by President every fifth year or earlier time as he considers. Finance Commission consists of Chairman and four members appointed by President.
The Finance commission recommends the measures and methods on how revenues need to be distributed between the centre and states.
Besides suggesting the mechanism to share tax revenues, the Commission also lays down the principles for giving out grant-in-aid to states and other local bodies. In the case of 14th Commission, these principles will apply for a five-year period beginning April 1, 2015 to 31st March 2020
It also addressing the imbalances that often arises between the taxation powers and expenditure responsibilities of the centre and the states respectively.It also has to ensure a sense of equality in public services across the states.
Former Governor Mr.Y.V.Reddy is the chairman of 14th Finance Commision.
The 14th finance commission recommended to increase the share of states in the centre’s tax revenue from the current 32 per cent to 42 per cent. This is indeed the single largest increase ever recommended by a Finance Commission.
The impact of recommendation of finance commission to central , The higher tax devolution will allow States greater autonomy in financing and designing schemes as per their needs and requirements,” says the report. Practically, it will give more power to states in determining how they spend this money.