Budget 2017-18: Business as Usual

Budget 2017-18 was presented at the time when the global situation is inhospitable, marked with protectionism and domestic environment is constrained by the twin balance sheet crisis. The investment climate is further jeopardised by the note ban. There was a great deal of expectations on the budget this year to create a policy environment to kick-start the virtuous investment cycle in the economy. However, this budget has turned out to be a mere ‘business as usual’ budget. While it does well to be prudent in containing the deficits, it fails to address the critical issue of accelerating investment and employment. The capital expenditure as a ratio of GDP is static and the clean-up of tax preferences, as promised, to reduce the corporate tax rates is yet to be initiated. The Finance Minister has lost the opportunity to prune the exemption list and align the excise duty rates in preparation to the GST implementation. Finally, the measures to reduce cash donations and the introduction of bonds to political parties is cosmetic and is not likely to have any impact on cleaning up political funding as long as anonymity of donors is assured. [NIPFP Working paper No. 191].