“The budget has managed to achieve a fine balance between fiscal prudence, rural spending, expenditure growth and tax stability. The finance minister has contained the fiscal deficit at 3.2%, while increasing the expenditure by 8.5% (in FY17-18), with virtually no changes to the tax regime.
In line with the Prime Minister’s speech on new year’s eve, the budget carries forward the government’s agenda of ‘Housing for All’ and of rejuvenating the SME sector, post demonetisation.
There is focus on the affordable housing sector, which is over 90% of all homes constructed. In addition to allocation for the construction of 1 crore housing units in rural India, the government has made home ownership affordable by conferring ’Infrastructure status’ on the construction of affordable homes. There is also a larger allocation (Rs. 43,000 combined via NHB & PMAY) to subsidise home loan interest rates through the National Housing Bank and under the Pradhan Mantri Aawas Yojana (PMAY).
It has also given an impetus to the resale market, by reducing the long-term Capital gains on houses after two years of holding.
Further, the budget is not inflationary. Consequently, interest rates are expected to be benign, which will lower the EMIs on home loans.
The SME sector will benefit through lower tax rates (25%) for all companies with a turnover of up to Rs. 50 crore. The enhanced lending under MUDRA (Rs. 2.44 lakh crore) will also help over 20 lakh SMEs avail working capital loans. This will help partly offset the higher tax compliance intended from this sector.
Thus, the middle class will benefit owing to these measures - on affordable housing, SMEs and lower personal tax rates up to Rs. 5 lakhs.”