Assocham calls for a Budget that revives economy post note-ban
Industry chamber Assocham on Sunday appealed to political parties to ensure that the Union Budget for fiscal 2017-18 to be presented to Parliament on February 1 aids the revival of economic sentiment at a time of depressed demand and investment.
“The advancement to February 1 (of the Union Budget) would help the government to begin its capital and other expenditure right from April and revive the much needed economic growth,” the Associated Chambers of Commerce and Industry of India (Assocham) said here in a statement.
“The decision of the central government for advancing the date of the Budget is well thought out from the point of view of revival of the economic sentiment. As is evident, the consumer demands as also corporate investments have been rather subdued owing to a host of factors,” Assocham Secretary General D.S. Rawat said.
Rawat was referring to the central government’s November 8 decision to demonetise high-value currency notes that has caused cash crunch and impacted economic activity in the country.
As a consequence, making its first projection on the country post-demonetisation, the World Bank earlier this week lowered India’s GDP growth estimate for this fiscal to 7 per cent from its earlier estimate of 7.6 per cent made in June last year.
“Unexpected demonetisation weighed on growth in the third quarter of FY 2017,” the World Bank said in its latest Global Economic Prospects report.
“Weak industrial production and manufacturing and services purchasing managers’ indexes further suggest a setback to activity in the fourth quarter of FY 2017,” it added.
Last week, India’s official statistician in New Delhi also lowererd the country’s gross domestic product growth estimates for 2016-17 to 7.1 per cent, compared with the 7.6 per cent growth in 2015-16.
While announcing its monetary policy review last month, the Reserve Bank of India acknowledged the demonetisation factor and lowered its gross value added (GVA) growth estimates for the current fiscal to 7.1 per cent from the 7.6 per cent forecast earlier.
Prime Minister Narendra Modi on November 8 announced demonetisation of Rs 1,000 and Rs 500 bank notes, saying the move was aimed to eliminate black money, counterfeit currency and terror financing.
Assocham said under the earlier arrangement when the Budget was presented on the last working day of February, its full and final passage would only happen by the middle of May, “with the result that half the financial year would be over by the time the money become available with the ministries and departments”.
“This typically leads to back-loading, rather than front-loading of government expenditure of the order of Rs 20 lakh crore, which itself is a strong trigger for boosting the economic activity. The bundling of expenditure in the last few months also affects the quality of government spending as the pressure to exhaust the allocated outlays in the set period leads to rush jobs”, the chamber said.
In this connection, it also noted that from this year on, the Railway Budget would be a part of the main Budget.