The economy is struggling with multiple challenges simultaneously. Deglobalisation looms.
Union Budget 2017-18 – External situation dictating decisions?
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The tax-to-GDP ratio has increased to above 11% for the first time since 2007-08, after which it has remained around 10% till now. Similarly, expenditure-to-GDP ratio has declined over the years. This would increase confidence in the country’s economy. The FM enjoyed the advantage of lower oil prices last year, which would not be available to him this year. Hence, the deficit targets (both fiscal and revenue) will be tough to achieve. The govt. could use the windfall from DeMo in the form of removing some of the liabilities of RBI. (But no such mention was available anywhere). With falling growth, DeMo could be key to realising more taxes to maintain fiscal stability. The budget has offered schemes and initiatives aimed at particular segments, farmers, the rural poor and youth. Exports growth is important for boosting overall economic growth. Until a couple of years ago, we hoped the revival of global economy would increase our exports. Now we are faced with a situation where the very survival of globalisation is at stake. This means our exports would take a hit. What of our growth rate then? You can refer to Bodhi resources page for downloading the PDFs of Economic Survey and Union Budget.
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