FY 2016-17 was a unique year for Indian financial systems.
Breaking the age-old tradition of presenting budget on the last day of
February. Finance Minister Arun Jaitley, for the first time in the history of
India presented the combined rail and general budget on the first day of
February. In the era of uncertainty, India stood as a shining star with the tag
of ‘Fastest Growing Economy on the planet’. Industry players were sceptical
about India’s growth story after the controversial move of demonetisation. The
sudden banning of big notes costed India a dip of 0.6% in its GDP but a large
section of people supported the move as some referring it to a ‘Surgical Strike
on Black Money’. For the very first time, millions of Indians got the chance to
use digital payments platforms. PayTM and the government promoted BHIM is now
on the ‘Never to delete’ list in our smartphones. Will FY2017-18 be the
beginning of the ‘Achhe Din’? Let’s analyse.
India’s role in the
Global Economy
The world economic growth for 2016 at 3.1% was the lowest
since the 2008 Financial Crisis. The never ending Middle East war, China’s
slowdown, low oil prices, Brexit impacted with major cuts in growth estimates.
The situation looks slightly better for upcoming year.
India has become the sixth largest manufacturing nation in
the world, rising from the previous ninth position. Recognising the strength of
strong economic fundamentals and consumer demand, the impact of demonetisation
will gradually fade away. The World Bank expects India’s economy to grow at
7.6% in FY2017-18. Here are the key takeaways from Central Statistic
Organisation outlook for FY2017-18.
Retail Inflation - 4% to 4.5% | Fiscal Deficit – 3.2% of
India’s GDP | INR - ₹64 to ₹66
Among emerging
economies, if there is any growth, that is in India. India is among the few
bright spots in the global economy – Christine Lagarde, Chief, IMF
Goods and Service Tax
GST is the most anticipated single indirect tax for the
entire country, which aims to make India one unified common market. Important
bills related to Central GST, State GST, Inter-state GST and UT-GST are
currently under consideration in Rajya Sabha. The four tier GST structure of 5%,
12%, 18%, and 28% is likely to be implemented by July 1, 2017. The bill is
hailed by industry experts as it likely to lead to ease of doing business,
competitiveness and spurring growth. CBEC GST Mitra helpdesk is well equipped
to deal with queries related to GST.
The JAM troika
Jan dhan, Aadhaar and Mobile. These three words changed the
way we pay. To ensure last mile reach, government encouraged people all from
the sections of the society to open a bank account and use RuPay debit
card. With 40 crore Aadhaar linked
accounts, more attention was given to ‘the way we pay’. The game changer move
of payments bank was quickly adopted by India Post, PayTM, NSDL and others.
India Post Payment Banks has plans to create 1.55 lakh access points in 650 districts
across the postal networks through-out India. Payments Bank operating in rural
India have herculean task to ensure that Rural Bharat and Urban India is on the
same page when it comes to digital payments.
Aadhaar enabled fingerprint payments are more sophisticated
than Apple Pay and Samsung Pay as it rules out the need of internet. Fintech
experts are cautious about the security concerns in Aadhaar Pay but ‘When there
is will, there is a way’.
Digital India –
Internet for everyone.
Last year, Kerala became the first state in India to declare
internet as basic necessity. Internet is key for last mile delivery of
government services in future. Bharat Net, a massive fibre optic cable laying
initiative in all village panchayat across India will complete 2 lakh kilometres
by the end of FY2017-18. Nearly 500 railway stations in India will enjoy high
speed internet services.
The launch of SWAYAM online platform with over 1500 courses
and its tie up with DTH channels is a welcome move to take quality education to
the masses. The launch along-side Bharat Net will enable students across India
to learn new skills and yield institute approved certificates. The IITs and
IIMs of this country will now go online, certainly a great initiative for avid
learners of India.
Basic healthcare information on a smart Aadhar Card will be
the first step as unique health identifier for the country. This will be
critical in identifying beneficiaries for social healthcare insurance programs.
E-health through Aadhar would substantially save patient’s time during emergencies.
The way we travel
A great start to a great year. Gurgaon Rapid Metro has
commenced operations for its 6.6 km phase II. Kochi Metro (25.1 km), Delhi
Metro Magenta Line (38 km) and Lucknow Metro (8.4 km) will commence operations
in FY2017-18. Construction of all 9 additional lines ie. Line 2 to Line 10
(approx. 160 km) of Mumbai Metro project will begin after monsoons. The metro
rail policy will be introduced with the focus on innovative models of
implementation, financing, standardisation and indigenization of metro related
hardware and software.
India’s semi-speed initiative, the Tejas express is likely to
run between Mumbai – Goa, Mumbai – Surat and Delhi – Amritsar in FY2017-18.
Indian Railways plan to redevelop 400 railway stations before 2025. Bids for
more than 25 stations will be placed by the end of the year. Indian Railways
may become the first railway in the world to run solar enabled trains.
Mumbai becomes the first city in India to implement electric
buses on a large scale. BEST will run 25 electric hybrid buses made by Tata
Motors on BKC route. 2017 will be the founding year for green mobility in
India. Governments plans to implement green mobility projects worth Rs. 70,000
crores in upcoming years. This includes 2,000 kms of Bus Rapid Transport
Corridors, hybrid buses, cycle & walk tracks, public cycle sharing schemes
and intelligent transport solutions.
In bid to revive regional connectivity via air, Ude Desh ka
Aam Nagarik (UDAN) scheme will connect to more than 75 small cities under Rs. 2,500.
In Phase 1, 43 airports and 5 carriers were selected. It is the largest ever
attempt for regional connectivity in the world. The move may attract airline
manufacturers to set up plants in India.
Cheers for New India
The world’s fastest growing economy is changing rapidly with
the innovative use of technology. The urge to do better and transform the lives
of masses fuels the energy for new India. Emerging economies like India are a
support system for global economy in the times of slowdown. Cheers for cleaner,
greener and better India.
- Chaitanya Kulkarni
