The 2016-17 Budget: A Positive Step in India's Transformation Process

Abstract

This paper analyses Union Government of India's 2016-17 Budget, comprising the Railway Budget as well as the main Budget components. It is argued that this Budget should be viewed as a part of the process of transforming India towards meeting challenges of growth and competitiveness in a manner which eases the ordinary life of the citizens, and which encourages aspirations for a better quality of life. The assessment criteria for transforming India include consistency with growth diagnostics, fairness, and preparing the country to rapidly progress towards an upper -middle -income category of nations. The paper discusses several seemingly small Budget initiatives with disproportionately large positive impact on outcomes, an important feature of competent governance. Other key characteristics of the Budget include harnessing knowledge and technology, innovative financing methods to use assets of government more productively, project planning to crowd-in private investments, and outcome-orientation. As a result, in several instances, the Budget has been able to obtain better efficiency in resource use as well as improved fairness simultaneously. The analysis identifies some Budget proposals which required better preparation, particularly concerning taxing of provident funds.

The paper concludes, that, on balance, India's 2016-17 Budget does improve India's public financial management, and advance the process of transforming India in the right direction. Suggestions for future Budget priorities include further expanding economic freedom contestability, and empowerment; accounting, budgeting, and procurement reforms; implementing Goods and Services Tax (GST) competently and expeditiously; refining Fiscal Responsibility and Budget Management (FRBM) framework, and reforming income tax and its administration.

Keywords: India, Public Financial Management, Growth Diagnostics, Fairness, Cooperative Federalism, Quality of Living and of Life, Fiscal Consolidation; Farm Sector; Knowledge and Technology Application