INDIAN UPDATE – An Analysis of the Union Budget FY 2016-17


  • The latest issue of the Cyril Amarchand Mangaldas Budget Assayer, a comprehensive analysis of the Union Budget for FY 2016-17, takes a close look at the provisions of the Budget with special emphasis on “Startup India” and “Make in India” initiatives of the Indian Central Government.
  • Despite a slowdown in global growth from 3.4% in 2014 to 3.1% in 2015, the growth of the Indian GDP has accelerated to 7.6% compared to around 6% in the last three years. Inflation has also been controlled to some extent, and the FM has set the fiscal deficit target at an ambitious 3.5 % of GDP, lower than the 3.9% in 2015-16.
  • The Budget focuses on infrastructure development in the agricultural and rural sectors in its pursuit of speedier economic development, and promises various benefits to the small taxpayers and farmers. Focused attention has been paid to employment generation and social welfare including healthcare and affordable housing. The FM has also attempted to address the biggest criticisms of the NDA government in this term, i.e., the lack of attention to the plight of the agrarian sector.
  • The Government has made efforts to deliver on its promise of an investor friendly tax regime. The ghost of ‘legacy cases’ may yet be laid to rest, as the FM offers a chance of settlement in the guise of ‘dispute resolution’ to the companies fighting such cases. As promised, the Budget also contains a slew of proposals aimed at simplification of tax laws and reduction in tax litigation, both on direct and indirect tax front.
  • While the corporate sector is relieved about the deferral of POEM but is apprehensive about the impending GAAR and the proposed phase-out of incentives to businesses, consumers feel burdened by the levy of additional cess on taxable services and on purchase of cars. However, the market sentiment so far has been positive.

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The Cyril Amarchand Mangaldas Budget Assayer can be found here.