Finance Minister Arun Jaitely presented a sharply reduced fiscal deficit year when the seventh pay commission responsibilities and defence OROP burden are looming. In his extensive budget that covered even many finer details, the FM has also made some remarkable reform measures besides bringing some surprises.
The most important surprise is the amnesty or what we call the voluntary disclosure scheme that allows a person to convert his undisclosed domestic assets into white money by paying an aggregate tax of 45%. With the SC already banned any amnesty scheme in 1997, it is to be seen whether the additional clauses of the new scheme will help it in front of the court.
Second surprise is that the government has not ended the Vodafone dispute though worsened its position by declaring that no more retrospective measures on the basis of said amendment. This will effectively put an end to the dispute as Vodafone press against stipulating the provision against the few selected.
The budget also proceeds with fine tuning tax concessions for corporate so that the CIT will be reduced to 25% in a phasewise manner. Serious administrative norms for reducing exemptions are very constructive to complete the reform.
On infrastructure, the government has provided nearly one lakh crore on roads. This include almost direct funding of Rs 50000 crores for National Highways. Btu no mentioning of smart cities and industrial corridors. These may be elaborated in the appendix as the two projects are going strongly.
On disinvestment, firm on strategic sale mode for CPSEs shows that government has done much homework on disinvestment front.
An important reform measure is the introduction of resolution regime for financial institutions. When most of the western countries have prepared resolution regimes after the financial crisis of 2007, India was slow on that. Now the resolution regime for banks may come before the bankruptcy code that is designed for all companies.
There were many small but careful reform measures in the budget that took more time for the FM to complete his speech. But the implementation of these measures need cooperation of states. Some of these measures are amendment of motor vehicle regulations to allow entrepreneurs to run competitive routes. Another one is given power to RBI for collecting data on primary and secondary market activities- an area which comes under the territory of SEBI.
A remarkable aspect of the budget is that it proposes a large number of small taxes on different fronts for unique purposes. Cess on cars to fund green projects is one such example. Tax clarification on startups and reduction of CIT to 29% for small firms , extension of clean environment cess are indicative of the work done by the FM and the team.