The 2016-17 Budget : A Positive step in India’s Transformation Process

India’s Railways and Union Government Budgets (hence forth the Budget) for 2016-17 should be assessed as part of a continuing process of transforming India rather than as a stand-alone event (albeit the most important event of the year).

Any budget is constrained by past policies and developments, and it will have impacts which transcend the fiscal year. Broader domestic and global developments, and perceptions and expectations of the stakeholders are also relevant in formulating a Budget.

The current external environment of subdued global growth and global trade, low or negative nominal interest rates, and a pervasive sense of fragility globally are factors which formed a part of the broader context in which the 2016-17 Budget was formulated.The domestic economic environment has also been challenging. There has beena continuing need to contain aftermath of imprudent fiscal policies of the previous government, two continuous years of drought, fiscal impact of the seventh Pay Commission for government employees, and fiscal challenges for the Union government arising from the acceptance of the recommendations of the 14th Finance Commission to devolve higher proportion of sharable tax revenue with the State governments.