Budget 2017 to try and ease pain from cash crunch

 

BUDGET 2017 – Finance Minister Arun Jaitley will likely boost spending and ease back on cutting the deficit when he presents his fourth budget on Wednesday, as he seeks to lift growth hit by the government’s drive to purge the economy of “black money”.

Prime Minister Narendra Modi’s surprise decision last November to scrap high-value banknotes worth 86 percent of India’s cash in circulation has hit consumer demand, disrupted supply chains and hurt capital investments.

Jaitley will present the 2017/18 budget at 11 am (0530 GMT) to the lower house of parliament.

The finance ministry forecasts that growth could dip to as low as 6.5 percent in the current fiscal year to March, before picking up in the coming fiscal year to between 6.75 and 7.5 percent.

While opinions vary on how long the disruptions caused by Modi’s crackdown on untaxed and illicit wealth will last, there is near unanimity among economists that Asia’s third-largest economy needs a helping hand.

Arvind Subramanian, Jaitley’s chief economic adviser, on Tuesday advocated slashing personal income tax and accelerating cuts in corporate tax rates. He cautioned, however, against pursuing debt-fuelled fiscal expansion. READ MORE

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