Budget 2016: Good, Bad And Ugly Syndrome, Who Gets What?

By - - 3 mins read

“Only yesterday Prime Minister Narendra Modi had said that the budget was like an exam for him. I must say he and his Finance Minister Arun Jaitley have passed the examination very well.
I compliment both of them,”
said Swraj Paul, Chairman and Founder, Caparo Group.


The 2016-17 Union Budget has a clear thrust for the rural economy while taxing urban and the top of the pyramid consumption.

Finance Minister Arun Jaitley on Monday provided relief to small taxpayers and dug the affluent to shell out more while focusing on the rural economy with much higher fiscal outlays, as he presented India’s national budget for 2016-17 in the Lok Sabha. Key notes that stand out in this year’s budget are:

  • Budget 2016 gives an overall push to agriculture, rural development and social sector.
  • One of the most significant things in Budget 2016 is the massive push to enhance irrigation.
  • Budget 2016 calls for a huge push in public investment in roads, in both the rural and urban areas.
  • Railways have given more funds in Budget 2016. The sector has been allocated Rs 1,21,000 crores.
  • With Rs. 72, 394 crore total allocation, the focus is clearly on strengthening and consolidating the education already in place.
  • New health insurance scheme to be announced during the year.
  • Government promises 100% village electrification by May 2018. One-third of that target has already been achieved.
  • Fiscal deficit target of 3.5% is a big plus for the economy as well as for the equity and bond markets.
  • Budget 2016 calls for providing the regulatory architecture to 10 public and 10 private institutions to emerge as world-class teaching and research institutions.
  • Budget 2016 calls for an additional Rs 50,000 deduction on interest on loans for first-home buyers and tax incentives on development of affordable housing.
  • The constitution of a committee to see how the nation’s growth can be sustained in the wake of the global economic slowdown.
  • A technology driven platform for government procurement of goods and services will be set up by the Directorate General of Supplies and Disposals.
  • Removal of plan/non-plan classification of expenditure from 2017-18.
  • Delhi Police allotted Rs 5913.74 Crores.
  • Govt. to build 10,000 kms of National Highways in FY17.

Finance Minister has also proposed nine pillars to transform India:

  1. Agriculture and farmer welfare with an aim to double farmers’ income in the next five years.
  2. Rural sector.
  3. Social sector including healthcare.
  4. Educational skills and job creation to make India a knowledge based and productive economy.
  5. Infrastructure investment to enhance quality of life.
  6. Financial sector reforms.
  7. Governance reforms and ease of doing business.
  8. Prudent management of government finances.
  9. Tax reforms to reduce compliance burden.

There are eight takeaways for individual taxpayers including the increase in tax rebate who are earning below 5lakhs to save additional Rs 3,000 in taxes. Finance Minister proposed extending the capital gains tax exemption to merger of different plans in the mutual fund scheme.

Mobile phone bills might see a marginal increase as a result of the announcement of additional 0.5% tax on all taxable services under the new Krishi Kalyan Tax aimed at benefiting the farming community. This means users will have to pay additional 0.5% tax on their mobile bills.

More to it, Mobile phones and tablets prices are set to rise about 5% after the government proposed to levy special additional duty on components such as populated printed circuit boards PCBs) and basic customs and countervailing duties on batteries, chargers, headsets and speakers.

However, Budget 2016-17 is a disappointing one for the Indian automotive industry. There were no bold steps announced for the revival of the sector, which has been struggling with declining growth rates. Like the corporate tax rate has been reduced marginally from 30% to 29% for domestic companies whose turnover doesn’t exceed Rs 5 crore.

Following are the items that will turn costlier: Cars, Gold, Imported Imitation Jewellery, Mineral Water & Aerated Water, Cigarettes & Tobacco, Bill Payments, Eating Out, Air Travel, Readymade Garments & Branded Apparel, Plastic Bags & Sacks, Aluminium Foil, Industrial Solar Water Heater, Lottery Tickets, Ropeway/Cable Car Rides, Legal Services, Hiring of Packers & Movers, E-reading Devices, Instruments for VoIP, Imported Golf Cars, Gold Bars.

Following are the items that will turn cheaper: Footwear, Solar Lamp, Router, Broadband Modems & Set Top Boxes, Digital Video Recorder & CCTV Cameras, Hybrid Electric Vehicles, Low Cost Houses With Less Than 60 sq. mt. Carpet Area, Sterilised Dialyser, Refrigerated Containers, Pension Plans, Microwaves & Ovens, Sanitary Pads, Braille Paper.


“FY17 Budget has provided a strong growth direction to the Indian Economy.
The Finance Minister has managed to balance the need to prioritize social sector requirements with economic and business imperatives.
The segmented 9-Pillar approach with well carved out deliverables will ensure execution clarity and focus,”

said Rana Kapoor, MD & CEO, YES Bank.


(Any information needs to be added, please let us know in the comments below).



Ayush Garg

Content Developer. Strategist. (A true) Startup Enthusiast. A kind of a guy who relies on analysis, and writes to spoil the masks. A threat to humor, if one liners could kill. Twitter: @profylayush.

Leave a Reply