Union Budget Report Of The Indian Government: Findings, Issues, Outcomes, Analysis, And Projections

Needs and Identification

Discuss about the Union Budget Report of the Indian Government.

As per Article 112 of Indian Constitution the Union Budget that is also known as the annual financial statement, is the projected expenses and receipts of government for the specific year. The Union Budget of the nation maintains the records for the fiscal year for which the budget is prepared that will be applicable to the country from 1^st April to 31^st March. Further, the revenue budget is divided into the capital budget and revenue budget (Sarkar 2016).

This report is prepared to focus on the revenue budget of the Indian Government that includes the expenditures as well as the revenue receipts. As there are 2 types of budget, that is the non-tax revenue and taxable revenue receipts, this report will find out the day to day expenses of the government associated with various services that are offered to the people of the country. If the revenue expenses exceed the revenue receipts then the net result will be shown as revenue deficit. In the 1^st part of the report the details regarding the research like the findings and issues and the crucial points from the findings will be discussed. In the 2^nd part, the crucial output and the outcome indicators and the crucial points from the outcomes will be discussed. Finally, based on the findings the conclusion and recommendation will be presented (Mittal 2015).

The union budget affects the people as well as the government in various ways. For instance, schemes related to new welfare, alterations in the tax rate and schemes related to the development in infrastructure. Various sectors of the economy analyses the union budget as per its impact on them. However, the union budget is required for the following purposes are –

• Resource reallocation: various economic related activities that the private sectors do not consider as profitable, owing to which it fails to attain the set social objectives. The government shall interfere in these areas through budget. For instances, these sectors are infrastructure, education and health sector (Duggal 2015).
• Reducing inequalities: from 1990s, the inequalities among the wealth and income have gone up in India. The subsidies and taxes under the union budget can be utilised to decrease the inequalities (Asher 2016).
• Reduction of regional disparities: regional disparities exist there that work as a barrier to the development of India. However, some urban areas has been emerged as the growth engine, the surroundings are far behind than expected. Therefore, the budget shall implement the policies to assure unique development for creating the bridge for division (Patel 2015).
• Reducing the poverty: though in the last few decades, India has appeared as economic superpower, the level of poverty is still remains high. Therefore, the union budget shall include the programmes and strategies to eliminate poverty through various programmes and schemes (Bhaumik 2015).
• Managing the public sector enterprises: under the approach of mixed economy that is adopted in India, the government are the owner of few public sector organizations like electricity and railways. Therefore, the budget shall have the policies for the purpose of optimum operation of these public sector organizations (Suresh and Maity 2015).
• Stabilization of economy: low rate of inflation, high rate of economic growth and low rate of employment shall be sought out to attain the policies that are outlined in the budget (Adak and Halder 2016).

The financial services of India are taking the dynamic shape with regard to the various Regulatory as well as government measures that are announced over the past years. the industry of financial services has been developed during the past years as follows:

• Credit-deposit ratio: marginally increased to 53.4% from 52.3%
• Gross bank credit: the credit in the housing sector increased by 4.4% an dthe micro credit has reduced to 4.5%
• Aggregate deposits in bank: INR 90.30 lakhs in aggregate (9.3%)

Key issues found are as follows –

Banking sector:

• Higher level of NPA under the public sector undertaking banks that amounted to INR 4.8 Lakh Crore
• Demonetization caused the lowering if cost of the funds
• Credit growth in lower rate (-0.8% during 2017 financial year)
• Requirement of credit off-take for utilising the higher deposits based for managing the capital adequacy ratios (Joshi and Ruparel 2016)

Non-banking financial companies (NBFC)

The NBFC sector has experienced better growth as compared to the banking areas during the last few years. the retail assets that are under management amounted to INR 4.2 lakh crores during 2015 an dare expected to become INR 6.1 lakh crore during 2017 FY. The rapid growth in the disbursement of credit by the NBFC was owing to their capability of mitigating the risks and creating demand in the niche market. However, the profitability of NBFC was considerably high as compared to the commercial banks. The key issues found in this sector are as follows:

• The benefits under section 43D was not available that lead to cash to be affected negatively owing to the taxes on the sticky advances, irrespective of the receipts
• Higher level of compliance costs and overhead cost that were caused by the TDS certificate collection from the customers.

Issues related to the budget

Overview of the insurance

During the past few years, the insurance sector in India has experienced various regulations.  These involves improving the foreign direct investments limits, issuance of the entry licence to the global reinsurances, formulating the norms for listing for the purpose of general insurances and launching the series of Pradhan mantri schemes for the financial inclusion. The findings from the insurance sector are as follows:

• The average growth for premium was 7.9% as compared to the 9.8% for emerging economies.
• The rate of insurance penetration was 3.44% as compared to the 6.2% of the world average
• The protection gap was 92.2% for the FY2015 and it was only 20% of the population in the health insurance sector and around 60% in the area of uninsured motor vehicles that run on the roads (Chava and Deshpande 2015).

The key issues that were found from the insurance sector are as follows:

• Lack of mindset with regard to returns and lack of awareness
• Unfavourable ratio of the expenditure of government towards the health care that is 30% as compared to China’s 56%.
• Low rate of penetration of insurance
• Requirement of trained distributor network as well as agents to minimise the misspelling and implement a long-run agenda for the association.

Mutual fund overview

The mutual funds have experienced overall growth for the past 10 years. The size of the mutual fund asset has gone up by 14% that is amounted to INR 13.5 lakh crore. Further, the fresh investments have gone up to INR 2.9 lakh crore from INR 1.8 lakh. However, the penetration in the mutual fund has been only 7% as compared to the 37% of the average of world. The key issues found from the mutual fund sector are as follows:

• Lack of penetration for mutual fund
• Lack of preference and awareness for the old method of the investment, for instance, gold and saving accounts
• High level of distribution cost in B-15 locations
• Requirement of formulation for strategic partnership, for instance, the postal networks and payment banks
• Requirement of trained distributors and agents.

The above presented budget provides focus on the receipts and expenses that are expected to be received and expensed in the coming year that is the financial year 2019-20. In the above presented budget, it is identified that the receipts of the government includes various receipts like receipts from various taxes like corporation tax, income tax, service tax and wealth tax. The expenses of the government will include the items like establishment expenses grants to finance commission, public sector undertakings and expenses for the central projects are few to be named.

The receipts excluded the recoveries from the advances and short-term loans from various states, loans made to the government employees and the receipts under the scheme of market stabilization are not taken into consideration (Kumar 2014).

Analysis of expenses

The expenses related to the establishments of the central are inclusive of all the expenditures associated with establishment and are inclusive of the establishment expenses that are attached to the subordinate offices. The finance commission transfers included in the deed of “transfers to state” and the category of the “other transfer to state” are inclusive of all the other transfers to the states that are made under the assistance to scheme and the relief fund related to the national disaster (Bhatia 2016). Further, the centrally sponsored schemes are inclusive of the schemes that are decided by the report of the chief minister’s sub-group based on the rationalization of the centrally sponsored schemes will be approved by the cabinet during 2017. Finally, the centrally sector schemes are inclusive of all the schemes that are totally implemented and funded by the central agencies (Pandita et al. 2017).

Program outcomes of the budget

It is expected that the Indian economy will end up the next year with high growth of 8% irrespective of fighting with the global economy that will lead to deteriorating the investment position. Further, the domestic economy will continue showing the flexibility even in case of the deteriorating international environment. During the year, it is also expected to experience various initiatives like amendment of GST bill and the bankruptcy code bill are also expected to be agreed upon. Irrespective of the demonetization, the Indian economy is expected to stand at the noteworthy changes for moving towards the unified tax and the GST. The Indian government on its part is confident regarding the existing schemes and approach and will increase the distribution in various programmes in the next Union budget. Therefore, the next step will clearly be efficient implementation of the schemes. That can potentially be helpful for the economy from the structural aspect. Schemes for removing the shortages of skill are expected to lead to the healthier market for job that is in compliance with the changes in time for bringing the changes at supply of economy.

While some challenges are there at the domestic level such as inflation, some challenges exist there at the international level that remains in the geo-political matters; the set up by the Union budget is prepared with the sustainable approach which in turn, will lead to the growth of economy.

Conclusion and recommendation

It has been concluded from the above discussion that the various economic related activities that the private sectors do not consider as profitable, owing to which it fails to attain the set social objectives. The inequalities among the wealth and income have gone up in India. The subsidies and taxes under the union budget can be utilised to decrease the inequalities. The regional disparities exist there that work as a barrier to the development of India. However, some urban areas has been emerged as the growth engine, the surroundings are far behind than expected. Though in the last few decades, India has appeared as economic superpower, the level of poverty is still remains high under the approach of mixed economy that is adopted in India. The government are the owner of few public sector organizations like electricity and railways. Low rate of inflation, high rate of economic growth and low rate of employment shall be sought out to attain the policies that are outlined in the budget. However, looking into the projected budget of the country for the financial year 2019-20, it can be recommended that the government shall interfere in these areas through budget. For instances, these sectors are infrastructure, education and health sector. The subsidies and taxes under the union budget can be utilised to decrease the inequalities. Further, the budget shall implement the policies to assure unique development for creating the bridge for division. Moreover, the union budget shall include the programmes and strategies to eliminate poverty through various programmes and schemes. Therefore, the budget shall have the policies for the purpose of optimum operation of these public sector organizations. Further, the Budget preparer are suggest to take into consideration the following things –

• It shall be committed for providing a predictable and stable regime for taxation
• Additional options to banking companies and financial institutions, including NBFCs, for input tax credits reversal with regard to non-taxable services
• Customs Act shall provide the deferred payment with regard to customs duties for exporters and importers and exporters with the proven track record.
• Provide alternative documents to PAN card for the non-residents
• Single window projects with regards to the customers shall be implemented at major airports and ports from the next year
• With regard to the free baggage allowances to the international passengers, the baggage that are carrying the dutiable goods are only to be filed
• E-assessment facility shall be implemented in the major cities

References

Adak, D. and Halder, S., 2016. Union Budget 2016-17: Impact Analysis on the Rural Sector. The MA Journal, 51(4), pp.38-42.

Asher, M.G., 2016. The 2016-17 Budget: A Positive Step in India's Transformation Process.

Bhatia, H.I., 2016. Decoding the Structure of Indias Union Budget. Journal of Commerce and Accounting Research, 5(1).

Bhaumik, S., 2015. Misplaced priorities in the union health budget 2015. Journal of family medicine and primary care, 4(2), p.174.

Chava, S. and Deshpande, V., 2015. Union Budget 2015: Reflections & Revelations. The MA Journal, 50(4), pp.58-63.

Duggal, R., 2015. Union Budget 2015-16: Shocking Neglect of Health Care (No. id: 6551).

Joshi, A. and Ruparel, P., 2016. India. In Angel Financing in Asia Pacific: A Guidebook for Investors and Entrepreneurs (pp. 151-169). Emerald Group Publishing Limited.

Kumar, N., 2014. Goods and Services Tax in India: A Way Forward. Global Journal of Multidisciplinary Studies, 3(6).

Mittal, P., 2015. Impact of Union Budget on Indian Economy. Asian Journal of Research in Banking and Finance, 5(9), pp.19-26.

Pandita, V., Patthi, B., Singla, A., Gupta, R., Malhi, R. and Prasad, M., 2017. Eliminating health disparities by implementation of oral health allocation in Union Budget-Empowering change. Journal of PEARLDENT, 8(1), pp.9-24.

Patel, V., 2015. Union Budget 2015–16, through Gender Lens. Feminists India.

Sarkar, S.S., 2016. Indian Union Budget 2016-17-in The Path of Growth. Global Journal For Research Analysis, 5(3).

Suresh, V. and Maity, B., 2015. The framework and process of Indian Union Budget with reference to 2015-2016. TSM Business Review, 3(1), p.88.