Finance Minister Arun Jaitley presented the Union Budget for 2016-17 and reaffirmed that the economy is on the right track. The budget is aimed at strengthening India's firewalls by ensuring macroeconomic stability and prudent fiscal management; driving growth through domestic demand; and economic reforms and policy initiatives to change lives for the better. With measured focus on social sector reforms and recapitalising India's banking system, this Budget has an overarching focus on improving agriculture, and scaling infrastructure, all of which bode well for the country. The government is now planning to rationalise and channel subsidies to the poor by increasing the burden on the rich, and by increasing spending on public welfare through its own kitty. Mr. Jaitley said the Union Budget is aimed at improving rural infrastructure and increasing rural income, as the biggest challenge to the economy is agrarian distress. Applauding the budget presented by the Finance Minister, Prime Minister Narendra Modi said the Budget is pro-village, pro-poor and pro–farmers, and is focused on bringing about qualitative changes in the country through a slew of time-bound programmes. The attached note captures key highlights and summarises major announcements in the Budget. Please reach out to us should you wish to understand more about the Union Budget and its impact on your business

1.
Union Budget
2016-2017
The Finance Minister summed up his third budget
with three li6le words that reflect big: Desire, Dream
& Vision; his desire to provide socio-economic
security to every Indian, his dream for a prosperous
naDon and his vision to transform India. Mr Jaitley has
described his three prioriDes as strengthening India's
firewalls by ensuring macroeconomic stability and
prudent fiscal management; driving growth through
domesDc demand; and economic reforms and policy
iniDaDves to change lives for the be6er.
This Budget has an overarching focus on improving
agriculture, and scaling infrastructure, with measured
focus on social sector reforms and recapitalising
India's banking system; all of which bode well for the
country.
But rising rural distress aKer back-to-back droughts
and a recent heavy elecDon defeat in a largely
agricultural state have upset the math from the
previous budget calculaDons, especially given the fact
that four out of every 10 people rely directly on
farming for their livelihoods. Thus, Agriculture has
topped the FM’s list of prioriDes – while Rs 35,984
crore has been allocated for agriculture in the next
fiscal, the outlay under the MGNREGA programme
was being enhanced to Rs 38,500 crore in a bid to
think beyond food security and move to income
security.
Infrastructure got a huge push with an allocaDon of Rs
2.19 lakh crore for road and rail sector. There’s also
great news for rural electrificaDon -- 100% rural
electrificaDon is expected by May 1, 2018.
ConDnuing government efforts to deal with the high
levels of NPAs or bad debts, of state-run banks, the
Budget has allocated Rs 25,000 crore for recapitalising
public sector banks. The markets were expecDng this
amount to be higher.
Several incenDves have been provided for the health
sector. The FM is looking at making quality medicines
available at affordable prices by opening 3000 generic
drugs stores to reinvigorate supply in 2016-17. The
‘NaDonal Dialysis Services Programme’ – a PPP under
the NaDonal Health Mission -- will not only benefit
people with renal problems but will also provide tax
incenDves to private players in the health sector.
A new health protecDon scheme will provide health
cover up to INR 1 lakh per BPL family. For senior
ciDzens an addiDonal top-up package up to 30,000 will
be provided.
As promised, start-ups have been given a three-year
tax holiday and capital gains exempDon, and the
Government will introduce a bill to amend the
Companies Act, 2013 in the current Budget Session of
the Parliament that would also improve the enabling
environment for start-ups.
Because innovaDon provides thrust to economic
growth, the FM has proposed a special patent regime
with 10% rate of tax on income from worldwide
exploitaDon of patents developed and registered in
India. IncenDves will be also provided to promote
entrepreneurship among SC/STs.
What comes as a surprise factor was the parDal
taxaDon of EPF and PPF. This will reduce pension
money significantly when it is withdraw on
reDrement. UnDl now there was no tax on investment,
on interest accrued and on withdrawal on EPF.
The third budget of Mr. Jaitley is rightly focussed on
rural development. Given the global turbulence and
the fact that demand has unDl now been created
within the country, a budget focusing on rural needs
will further spur economic acDvity and growth. But as
trading came to a close today, the Sensex finally
se6led at 23,002 points, down 152 points from the
previous day’s close aKer fluctuaDng through the day.
We now have to wait and watch how industry and
markets react to this Budget as it pans out in the
coming fiscal. We live with hope that this Budget will
prompt growth and development as the FM pracDces
fiscal discipline.
Medha Girotra
Public Affairs PracDce Lead

2. PILLARS FOR REFORMING INDIA

3. What are your ini;al reac;ons to
Finance Minister Arun Jaitely’s
2016-2017 Budget speech?
My first reacDon is that it is quite a
predictable budget. It was expected
that the government will give a
reemphasis on infrastructure, which it
has done. There is some uncertainty
about whether it would reduce or
bridge the target on the fiscal deficit.
The finance minister maintained that
target, however he has also
announced that he is going to set up a
review mechanism or commi6ee to
look into the whole Fiscal
Responsibility and Budget
Management (FRBM) system because
in many ways it is quite long.
What are your thoughts on the
announcements in the agriculture
sector?
It is certainly forward looking budget in
this sector. Usually, in the budget the
government always emphasises on
what looks good. In that sense, there is
a significant thrust on the agriculture
sector. With so much talk about the
treatment of farmers and farmer
distress, I think it’s a good a thing to
give emphasise on the sector.
However, I wouldn’t hold my breath
about how much of this is possible in
one year. In my view one of the best
things to be announced is the crop
insurance scheme for farmers.
Based on what the Hon’ble Finance
Minister spoke on the floor of the
house, how do you see the
implica;ons from implementa;on of
7th pay commission and OROP play
out?
As far as OROP is concerned, I think
the government has already adopted
that and set out the plan. On the 7th
pay commission the Finance Minister
has declared that he has made an
interim provision so that it will take
care of the burden of this financial
year. However, both OROP and the 7th
pay commission has many implicaDons
beyond the coming financial year. It
also depends on when the 7th pay
commission recommendaDons begin
to get implemented. So I think we are
covered for this year, but the
implicaDons further down the line are
yet to be worked out.
There have been a slew of measures
which have been announced, which
include tax sops for small businesses,
the increase of the cap from 1 crore to
2 crore.
Do you think this is an entrepreneur
friendly Budget, and in what way?
Yes, I think the increase from 1 crore to
2 crore, provisions for scheduled
castes and tribe to become
entrepreneurs, are all posiDve steps. It
is clearly an entrepreneur friendly
budget. How it will translate into
results on ground is yet to be seem. It
is important to remember that the
budget is just an announcement, it
needs to be translated into actual
acDon.
What is in it for Corporate India?
Very oKen there are small things that
need to be done that do not lead to
big news but can be quite important.
For instance, an IT plaporm or making
processes transparent. There are
several such small things that have
been announced though there is no
big Dcket announcement on the
corporate taxes side. I would agree
that there has not been great
excitement on the side of the
corporates, as far as the tax sops are
concerned. But the important thing
from their perspecDve, is the seqng
up of an Asset ReconstrucDon
CorporaDon for which they have set
aside the money to recapitalise the
bank, or clean up their balance sheets.
That’s very significant.
Do you think the steps announced for
the recalibra;on of banking sector?
Public sector banks have done a lot of
imprudent lending, with people who
don’t pay back the money that they
have borrowed. This is what puts the
banks and the balance sheet under the
pressure. UnDl this gets cleaned up in
the balance sheets, the banks
cannot do fresh lending.
What the Finance Minister has
announced is that those who are
holding all these non-performing
loans, they will be handed off to a
separate Assets ReconstrucDon
Company or what is oKen called a bad
bank, because it takes on all the bad
assets. It will ensure that the balance
sheets get cleaned up, and the banks
can restart their lending operaDons.
Whereas the Asset ReconstrucDon
Company will try separately to recover
some of those loans, without in
anyway impairing the funcDoning of
the bank. I would say this is one of the
very important moves which the
Finance Minister has made today.
One of the pillars the Finance Minister
focused on was Educa;on, Skilling
India and Job crea;on. Do you see
this posi;vely contribu;ng to India’s
growth?
I think this is another good move in
that direcDon, some of these items are
good in themselves. But the important
quesDon is the scaling. Are you puqng
enough money behind these schemes
or is it just a token allocaDon? My
concern with the skilling India
programme is it is a good thing to do,
but are you doing it on a sufficient
enough scale to really make a
difference to the employment market
for producDve skilled labour. There is
food for thought here.
If we compare this budget to last year,
do you think the government has
progressed?
The government has definitely tried to
make progress along the lines that had
been indicated last year. The main
features are to push infrastructure
investment, try and maintain fiscal
prudence without raising the deficit
too much, also on the tax proposal
side where the government said they
will reduce corporate tax
along with reducDon of
exempDons, so those
things have largely been
done.
11:04 AM Beginning
of budget speech
BSE SENSEX 23,127.57
12:44 PM End of
budget speech
BSE SENSEX 22,966.34
Sudipto Mundle
Emeritus Professor,
NaDonal InsDtute of Public Finance And Policy
An autonomous research insDtute under Ministry of Finance
ECONOMIST VIEW

4. Government’s
focus will be on
ensuring macro-
economic stability and boosDng
domesDc demand besides conDnuing
the pace of economic reforms. It has
also vowed to provide prudent fiscal
management. On a broad level, the
focus on infrastructure seems right, as
it will certainly help
connect the country
be6er thereby
providing be6er
opportuniDes to
expand and deepen
the domesDc market.
Given the condiDon of
internaDonal markets
it would be wise to
focus and build the
large opportunity that
is available in India.
The focus on agriculture and the
opening up of foreign direct investment
(FDI) through the FIPB route for
markeDng food products produced and
marketed in India can also boost the
agricultural sector. InteresDngly, the
government did not wait Dll the fourth
year of coming to power to focus on
issues that normally see benefits closer
to the elecDon year. Eight schemes
have been introduced for the
agriculture sector-the Pradhan Mantri
Krishi Sinchai Yojana, Parmparagat
Krishi Vikas Yojana, Organic Value Chain
Development in North East Region,
Unified Agricultural MarkeDng
ePlaporm, Pashudhan Sanjivini, Nakul
Swasthya Patra, E-
Pashudhan Haat and
NaDonal Genomic Centre For
Indigenous breeds. These
should give a good boost to
the rural economy.
The Finance Minister also
focused on the issue of
governance and ease of
doing business and
importantly consDtuted a
Task Force for raDonalizaDon
of human resources in various
ministries. On the Make in India front
the Budget has tried to make a
contribuDon to change customs and
excise duty to improve compeDDveness
in sectors ranging from informaDon and
technology hardware to capital goods,
defence producDon, texDles, chemicals
and petrochemicals to aircraK and ship
repair. Taxes have also been simplified
and raDonalized to make it easy for
doing business in India.
The frailty of tax regime that the
corporate sector has been poinDng to
also received menDon with the finance
minister commiqng to a stable and
predictable taxaDon regime. Companies
will now hope that the Minister and his
officials will remain commi6ed to this
cause. Overall, it is a Budget that is
more focused on macro issues rather
than on specific sectors. This should
provide the right kind of environment
for building strong connecDvity and
boosDng producDvity both at the farm
and industry level. This also in a way
addresses the criDcism that the BJP is
interested in corporate welfare over
farm welfare.
The NaDonal DemocraDc Alliance
government seems to be looking to use
the Budget to boost growth by giving
the rural and investment sectors a big
push. However, the most important
task for the government will be to
maintain fiscal prudence when
spending for growth.
The “Transform India” Union
Budget presented by
Finance Minister, Mr.Arun
Jaitley, in Parliament today
seems balanced at first look
and hopefully will have no
devil in the details.
T S Vishwanath
Senior Policy Advisor,
Edelman India
Non-Tax Revenue
INR 1,81,561
crore
Revenue Receipts
INR 8,03,808
crore
Capital Receipts
INR 5,10,189
crore
With a pro-small business, pro-agriculture budget, the impact of this Budget will certainly not be visible
quickly. The way I see it, this budget is about trying to make a long term impact. If the approach works, then
the improvements may be more broad-based and have a bigger impact on the jobs front and hence boost
demand.
The Government’s commitment to sLck to the 3.5% fiscal deficit is good but its reliance on somewhat
uncertain revenue sources suggests that the actual figures may well be different from the budget esLmates.
Also in the long run, aSempts towards bringing more flexibility to the FRBM may create its own issues.
There a bright spot such as iniLaLves on broadening of agricultural procurement and developing SC/ST
entrepreneurs’ hubs. Also welcome is the announcement of steps towards developing guidelines for PPP
resoluLon such as the Public ULlity (ResoluLon of Disputes) Bill and guidelines for renegoLaLon of PPP
Concession Agreements. Some of the tax reforms and financial sector changes may have salutary effects as
well.
Some of the financial sector changes like broadening the SecuriLes Appellate Tribunal (SAT) and empowering
Asset ReconstrucLon Companies (ARCs) may promote business in the long run. However, these steps are
unlikely to get much acLon going on the “Make in India” front at least in the immediate run.
The other thing which is quite interesLng, I don’t know if it’s posiLve or negaLve, is tax collecLon research.
Dr. Rajesh Chakrabar;
ExecuDve Vice President
Research and Policy
Wadhwani FoundaDon
POLICY EXPERTS’ VIEWS

5. Infrastructure
Social sector, education, health
Roads, incl PMGSY
Rural sector
Rural employment (MGNREGS)
Agriculture and Farmers’ welfare
Recapitalisation of Public Sector Banks
Pradhan Mantri Gram Sadak Yojana (PMGSY)
Prime Minister Fasal Bima Yojana
Skill development
2,21,246
1,51,581
97,000
87,765
38,500
35,984
25,000
19,000
5,500
1,804
Major allocations for FY17 (INR crore)
Plan
Expenditure
+
Non Plan
Expenditure
= TOTAL
INR 3,45,978 Cr INR 9,68,019 Cr INR 13,13, 997 Cr
SNAPSHOT

6.
Edelman India’s Public Affairs (PA) practice combines industry,
regulatory affairs and communications knowledge to develop and execute
PA campaigns based on solid research and insights that inform impactful
strategies.
We work with our clients to anticipate issues; plan and respond to the
emerging challenges at national, state and local levels.
At the core of the offering, is the ability to develop long term relationships
and maintain constant engagement instead of an ad-hoc approach.
Our team of 30 personnel includes senior industry professionals, domain
experts, researchers and writers from a wide range of backgrounds. We have
access to an extended group of advisors from civil service, media and NGO
circles who help us navigate the vast and complex stakeholder universe in
India.
Edelman India has offices in Mumbai, Delhi, Bangalore and a vast network
of representatives in state capitals.
PA PRACTICE
• Government outreach
• Stakeholder engagement
• Issues management
• Industry affairs
• Policy & regulatory
advocacy
• LegislaDve tracking
• Crisis & risk management
• Strategic media relaDons
• CoaliDon building
• Thought leadership
• Market entry
• CSR engagement
CONTACT US
Contact the PA practice:
Medha Girotra, Public Affairs Lead
Medha.Girotra@Edelman.com
@EdelmanIndiaPA
Edelman India Private Limited
VaDka Triangle, 5th Floor, Sushant Lok-1, Block A
Gurgaon, Haryana 122 002, India