Modi government has advanced the presentation of the Budget by one month, it has removed the separate Railways Budget and it has merged the two categories of “planned” and “non-planned” spending.
According to the Part I of the Economic Survey presented at the beginning of Budget session, growth for fiscal year 2016-17 was 7.1%. Its deflated value is due to demonetisation. Survey implicitly blames the high interest policy of the RBI for thwarting industrial growth.
According to it, the continuing deflationary trends rise from:
- Lower investment ratio.
- Low farm prices.
- The cutting back on development spending by State governments.
- The twin balance sheet problem.
The Survey mentions Uttar Pradesh which had to slash its development spending by 13% in order to waive the farm loan.
However, the situation at the Centre is improving. Exports are positive. Four major reforms are taken:
- A new insolvency and bankruptcy code to deal with NPAs.
- A new monetary policy framework.
- Aadhaar linkage.