“Effects of demonization are not expected to spill over the next year,” says Finance Minister ArunJaitley in Union Budget 2017-18 tabled in the Parliament on 1st February 2017. With a projected growth in GDP and a more digitally-connected nation, here are some of the key takeaways from the budget and what it means for the Indian economy steering towards achieving digital growth:
1. Online booking of rail tickets to cost cheaper
In a historic move, the Railway Budget has been merged in the General Union Budget and that has also brought in some good news for travellers. In his budget speech, Jaitley announced that there will be no service tax on digital rail bookings done through IRCTC- the online ticketing portal of Indian Railways. In wake of demonetization, the government had already withdrawn service tax on tickets booked through the portal until December 31. However, in a bid to push digital payments, the service taxes will now stand null.It is worth noting that the earlier railways charged Rs 20 as service tax on Sleeper Class and Rs 40 on AC Classes for booking tickets through IRCTC. These charges will no longer be levied, following the latest announcement.Additionally, the finance minister revealed that cashless rail reservation had gone up from 58 per cent to 68 per cent following the ban on old higher currency notes.
2. Optical Fibre rollout and Digital Village
Furthering the government’s drive to bring more connectivity to remote regions, Jaitley proposed optic-fibre based internet connectivity across 1.5 lakh gram panchayats across the country. He added that the government has already laid down optical fibre across 150,000 km in the country, and Rs 10,000 crore has been allocated for BharatNet program in the next fiscal.The ongoing BharatNet phase I aims to connect 100,000 gram panchayats by March this year, and the next phase is expected to begin from mid-2017 running all the way up to September 2018. The Phase II will seek to connect 150,000 gram panchayats and, for the first time, through a public-private partnership.Additionally, a new initiative called DigiGaonhas also been proposed. Targeted at villages, the initiative aims to provide tele-medicine, education, and skills, through the use of digital technology.
3. Manufacturing in India
India is currently the sixth largest manufacturing country in the world and is soon evolving as an engine of global growth. With the latest announcement, the technology industry is set to witness a further boost. Jaitley announced that the government is creating an ecosystem to make India a global hub for electronics manufacturing. To realize the aim, Jaitley announced an increase in budget allocation of schemes like mSIPS and EDFs to Rs 745 crores in 2017-18.
4. New digital payment for senior citizens
A new digital pension distribution system has been announced by Jaitley, under which retired defence personnel will have easier access to their funds. Additionally, for senior citizens the government will introduce Aadhaar-based smart cards that will contain health information on the citizens.
In light of the increased push towards a digital economy, there comes a need to secure the infrastructure against emerging cyber threats. To tackle this, the government will set up a dedicated Computer Emergency Response Team (CERT) for the financial sector. The CERT team, which is a team of computer experts and computer scientists to help secure government’s online presence, will link regulators such as SEBI and RBI to further boost the move towards digitization. It is expected that this will allow finance technology companies more opportunities in the financial sector.
6. Aadhaar Pay
Soon, a new Aadhaar –based payment system will be launched. The system has been detailed by the government earlier and is currently under pilot in Andhra Pradesh. Using biometrics, the system is targeted at people living in rural regions who are not digitally literate enough to use debit cards or other modes of digital transactions.
7. BHIM App
Following demonetization, the government introduced a common UPI app called BHIM. The app has reached 1.25 crore users until now and Jaitley announced two new schemes to further facilitate cashless transactions. The BHIM app will be soon updated with two new schemes which will benefit both individual users and merchants. The new schemes include a bonus scheme which will benefit the users, and a cashback scheme that will be targeted at benefitting merchants. To widen use of BHIM app, the government will take additional steps to help promote setting up of digital payment systems at petrol pumps, fertiliser depots, municipalities, block offices, road transport offices, universities, colleges, hospitals and other institutions.
8. Digital Education
During his budget speech, Jaitley proposed Swayam, an online education platform, or Massive Open Online Course (MOOC) that would help people to build skills and gain employment. Aimed at offering virtual education, this platform will offer up to 350 online courses which will be made accessible also through Direct-To-Home (DTH) channels.
9. Seamless banking
The Finance Minister said that in the coming year, the government aims to provide core banking support for cooperative banks, in order to create seamless banking in the country. In order to do that, Jaitley suggested roping in companies like Infosys, TCS, and FIS to sell core-banking software. In addition to that, he also proposed new payment banks and small banks in the country, for smoother and easier transaction.
10. Changes in Metro policy
In yet another attempt at bringing more jobs at home, the government will be announcing a new metro rail policy. Under the new policy, changes will be introduced including standardization and indigenization of hardware and software that will help generate more jobs.