Home India Demystifying ...

Demystifying the process: Budget 2016

0

By Amit Kapoor

New Delhi: The course of fiscal policy of the government is decided by the budget, which is an important document. This year too seems to be kick started with the halwa ceremony, renowned for commencing the printing of the budget documents on February 19.

Another unique feature of this year’s budget is that some of the key officials have communicated through a series of videos that aim to demystify the budgetary process. These videos also give a flavor about the essential features of the upcoming budget to be presented by FM Jaitley on February 29.

The key officials that have spoken before the budget announcement include the finance minister, the minister of state for finance, and the revenue and the economic affairs secretaries – and all have made some crucial points relating to the budget 2016.

The finance minister, in his interactions, had mentioned the use of technology to the advantage of all taxpayers. Already some 1.4 crore people have been notified of the budget refunds through the technology platforms and their refunds have been processed through the same medium. Roughly 90 percent of the budget filings are done online, and this is where the power of technology is making the tax process smooth and efficient.

The minister of state for finance, in his interaction, has mentioned that the budget will aim to reduce poverty, provide prosperity to farmers, help in job creation for the young people of the country and provide a better quality of life to all citizens. He also expressed his belief that India will continue to be a beacon of growth and stability in a very turbulent global environment.

The economic affairs secretary tried to demystify the budget process and mentioned that it is a long-term process as opposed to the common conception. It generally starts in September with a detailed circular being issued to all the ministries. Post this, in November and December, the Department of Expenditure holds meetings with various ministries about the requirements in the current and the next years.

At the beginning of January, the Department of Revenue makes its forecasts for the current year and the next year. There are the revised estimates for the current year and the budget estimates for the next year. Post this once the revenue and expenditure proposals converge, the finance minister holds consultations with various stakeholders and proposals are concretized at the end of January. Decisions are then taken and post this followed by printing of budget documents.

The economic affairs secretary also alluded to the fiscal deficit and how the government is looking at it. He too was upbeat about India’s performance amid global turbulence and said that budget has to focus on growth as it leads to job creation and economic development.

The revenue secretary, in his interaction, mentioned taxation and the broad structure of the budget. He stated that the total tax revenue projection is Rs.14.4 lakh crore. The income tax revenue is close to about Rs.7.9 lakh crore and the indirect tax revenue is close to Rs.6.5 lakh crore.

Within the income tax, there are two components – the corporate income tax and the personal income tax. The corporate income tax is around 59 percent while the personal income tax is around 41 percent.

On the indirect side, there are three major components: excise duties, customs and service tax. Normally these are roughly the same contribution, but this year, due to the oil duty, the excise duties are close to 39 percent while the other two form the remaining indirect taxes.

The service tax structure is diversified, which is a good thing. The direct side seems as having a shortfall of about Rs.40,000 crore as corporate earnings have been low but this will be compensated by the indirect side which is buoyant. The revenue secretary also alluded to ways and means to reduce the litigation that has been seen as a perennial problem for India’s corporate sector.

In the week ahead, a lot of haze will get cleared on the issues pertaining to the budget. The new media strategy seems to be a good initiative leading up to the budget. Overall the stage is set for a historic budget. It is also hoped that the government succeeds in the balancing act when Finance Minister Arun Jaitley presents the budget in the Lok Sabha at 11 am on February 29. (IANS)

Next Story

Canada Faces Sharpest Downturn in GDP Since 2009

Canadian economy sees worst quarterly performance since 2009

0
flag-canada 2009
Canada witnesses worst quarterly performance since 2009 due to the COVID-19 outbreak. Pixabay

Canada’s national statistical agency said that the country’s economy saw the worst quarterly performance since 2009 due to the COVID-19 pandemic.

Statistics Canada said on Friday that it came as the GDP suffered a big drop in March as restrictions against the spread of COVID-19 began rolling out during the month, reports Xinhua news agency.

The downturn in GDP, the sharpest since the first quarter of 2009, reflects measures rolled out in March to contain the COVID-19 pandemic, such as closures of school and non-essential businesses, border shutdowns and travel restrictions, as well as events earlier in the quarter, mainly the Ontario teachers’ strike and rail blockades in February.

The country’s GDP fell 7.2 per cent in March from February, the most severe month-on-month fall, while annualized growth for the first quarter decreased by 8.2 per cent, the largest since the depths of the Great Recession.

financial 2009
The country’s GDP fell 7.2 per cent in March from February, the most severe month-on-month fall. Pixabay

Household spending was reduced by 2.3 per cent in the first quarter of 2020, the steepest quarterly drop ever recorded.

Also Read: Delhi Jal Board to Bring in a State-Of-The-Art Technology: Sewage Cleaning to go Hi-Tech

Spending reductions were influenced by substantial job losses, income uncertainty and limited opportunities to spend because of the mandatory closure of non-essential retail stores, restaurants and services, and restrictions on travel and tourism activities.

Real GDP plummeted by a record 11 per cent in April from March as most sections of the economy were shut down to fight the COVID-19 outbreak.

The March and April falls are likely to be the largest consecutive monthly declines on record, said the country’s statistics agency. (IANS)

Next Story

PC Pal: Lenovo Launches Free Service to Find Devices Based on Lifestyle Needs

The service is designed to simplify the purchase process

0
Lenovo
Lenovo launched a free service called PC Pal to help consumers find laptops accordinbg to their personal needs. Wiukimedia Commons

Lenovo on Thursday launched a free service called PC Pal to help consumers find perfect devices based on their lifestyle needs.

According to the company, the service will offer neutral, unbiased recommendations based on individual requirements, to help consumers make informed purchase decisions.

“A lot of consumers in India are looking to buy a PC, many of them for the first time. However, there are so many choices available that it can be difficult for a consumer to decide. This challenge of finding the right laptop can be addressed by PC Pal, by providing expert, impartial advice,” Rahul Agarwal, CEO and Managing Director, Lenovo India said in a statement.

The service is designed to simplify the purchase process and reduce the hassle of selecting the right laptop.

Lenovo Yoga
The service reduces the hassle of selecting the right laptop. Wikimedia Commons

‘PC Pal’ asks a few simple questions and showcases the ideal configuration based on the consumer’s responses.

Also Read: Every 4 in 10 Adults Suffer From Gastrointestinal Disorders Globally: Researchers

Factors considered include the consumer’s computing need, budget, and lifestyle requirements. It will make a recommendation for the right model for that consumer regardless of PC brand.

The service is available by telephone or online. (IANS)

Next Story

The USD/INR Outlook – Is the Indian Rupee in Decline?

Due to the Coronavirus pandemic Indian economy is expected to contract by 5% in the financial year 2021

0
rupeerupee Indian
Indian Rupee has fluctuated wildly during the last couple of weeks mainly bacuse of the pandemic. Pixabay

Not all nations have handled the coronavirus outbreak with the same measure of efficiency, with India’s chaotic lockdown and confused messaging creating significant uncertainty about the region’s short and medium-term future.

According to the American brokerage firm Goldman Sachs, the Indian economy is subsequently expected to contract by 5% in the financial year 2021, representing the nation’s worst ever performance in this respect.

Despite this sustained economic decline, the Indian Rupee has fluctuated wildly during the last couple of weeks. But why is this the case, and what’s the long-term outlook for this emerging currency?

How has the INR Fared in Recent Times?

Unsurprisingly, the Indian Rupee edged lower during the first week of May, pairing back some of the gains that it made since its initial crash in March (when the lockdown was first announced at incredibly short notice).

Indian rupee
The INR has also enjoyed brief periods of growth against the USD more recently. Pixabay

This depreciation came after the INR actually made gains of 0.3% against the greenback at the end of April, capping three consecutive weeks of modestly rising sentiment for the INR/USD.

This decline came against the backdrop of an increasingly negative economic outlook, with agencies such as the International Monetary Fund (IMF) and World Bank providing decidedly downbeat forecasts for medium and longer-term growth.

However, the INR has also enjoyed brief periods of growth against the USD more recently, as it began to incrementally recoup losses and trade within a far wider range. This was largely attributed to better-than-expected Chinese export data, but this trend will not necessarily be sustained over time.

What Does This Tell Us About the Market?

The most recent rise in the performance of the INR also highlighted a slight increase in the market’s appetite for risk, with traders leveraging platforms such as Oanda to track daily price shifts and profit directly from these as the global sentiment improves incrementally against a backdrop of falling Covid-19 cases.

The INR remains a currency to avoid for risk-averse traders, however, particularly as a growing fiscal deficit and increased quantitative easing measures in India continue to restrict growth and devalue the rupee considerably.

rupee-Indian
The most recent rise in the performance of the INR also highlighted a slight increase in the market’s appetite for risk Pixabay

Also Read: Deepika Padukone Joins Hands With Instagram to Create A ‘Wellness Guide’

This, combined with rising daily volatility and a slight increase in demand, will definitely divide opinion in the forex market depending on each trader’s unique outlook and overall investment philosophy.

These factors also combine to create an increasingly negative long-term outlook, especially for the remainder of 2020.

Make no mistake; as quantitative easing continues and the base interest rate in India remains noticeably low, the value of the INR will depreciate incrementally over time while experiencing a significant shortage in demand.

[Disclaimer: The article published above promotes links of commercial interests.]