Finance minister Arun Jaitley’s second full budget is done and dusted. Expert views are flying thick and fast – dissecting the numbers, deciphering its political messaging, and helping build public opinion.

Like last year, Quartz roped in some of India’s smartest graduate students to find out what they thought of Jaitley’s budget. This year, students from the Indian Institutes of Management, the Indian School of Business, Hyderabad, and New Delhi’s Jawaharlal Nehru University went through the full text of the budget speech and annotated it.

Irrespective of their ideological moorings, they questioned some basic premises on which the budgetary edifice was built by Jaitley. However, there was also a broader agreement that the rural thrust of his speech was welcome and perhaps even much needed. But, again, doubts lingered over implementation.

Overall economy


I am presenting this budget when the global economy is in serious crisis. Global growth has slowed down from 3.4% in 2014 to 3.1% in 2015. Amidst all these global headwinds, the Indian economy has held its ground firmly.

Ishan Anand (JNU): India’s growth story continues to be a mystery. “Indian economy has held its ground firmly” is a statement that is based on GDP calculations, which even the RBI [Reserve Bank of India] doesn’t follow. So, we need to be a little cautious making such claims.


The growth of GDP has now accelerated to 7.6%. CPI inflation has come down to 5.4%. The current account deficit has declined from $18.4 billion in the first half of last year to $14.4 billion this year. It is projected to be 1.4% of GDP at the end of this year.

Arkajyoti Jana (JNU): As India imports around 80% of its oil needs, continuous fall in crude oil prices in the international market has a direct and exogenous effect on the Indian economy. Obviously, this has direct and positive implication for both GDP and inflation figures.This might have more than compensated for the monsoon shortfall.

Vivek Khetan (IIM, Bangalore): I agree with Arkajyoti. It was expected that the government would be chest thumping on the lower budget deficit and the decreasing CPI [consumer price index] inflation. What they didn’t tell us was that the WPI [wholesale price index] inflation is actually in the negative territory, which indicates that despite the Make in India drive the manufacturing sector has failed to pick up.

Farm distress


The Pradhan Mantri Fasal Bima Yojana has already been announced to protect the farmer from the adverse consequences of nature. The farmer will pay a nominal amount of insurance premium and get the highest ever compensation in the event of any loss suffered. A health insurance scheme which protects one-third of India’s population against hospitalisation expenditure is also being announced.

Vivek Khetan (IIM-B): This is a good measure. However, a few challenges of implementation remain: Creating awareness amongst farmers, easy access to insurance office, simple process to claim insurance, swift disbursement, preventing leakages, phantom insurance and claims, and exploitation of farmers.

Ishan Anand (JNU): This is much needed. However, a lot depends on implementation. We have seen how farmers have returned compensation cheques worth Rs 75!

Tuhin Harit (ISB): An insurance scheme must be complimented by healthcare providers and facilities. The incredible absence of healthcare givers in rural areas is what leads the poor people to move to urban areas.


We need to think beyond food security and give back to our farmers a sense of income security.

Ishan Anand (JNU): Thinking beyond food security must not mean scuttling food security schemes! The total food subsidy in this year’s budget is Rs 1,34,834.61 crore. This is around Rs 4,584 crore less than the RE for 2015!

Arkajyoti Jana (JNU): A focus on the farmer’s income is a move towards an important direction. But an overall approach towards the agriculture sector is required in order to raise welfare of the people involved. Targeting income without these seems to be unsustainable.


The Soil Health Card Scheme is now being implemented with greater vigour. Through this, farmers get information about nutrient level of the soil and can make judicious use of fertilizers. The target is to cover all 14 crore farm holdings by March 2017.

Vivek Khetan (IIM-B): These are all fine steps. I feel that government should provide something like a farm doctor for a cluster of say 20-30 villages who should provide farmers inputs about best variety of crop, type of crop, fertilizer usage, pesticide usage, organic farming, how to sell etc. I know of a group call Farms and Farmers [FnF] which is doing the same in Bihar. Also the government should promote co-operative farming in the country to counter land fragmentation.


A national level competition will be held among 674 Krishi Vigyan Kendras with a total prize money of Rs 50 lakh to improve the efficiency and performance of these Kendras.

Ishan Anand (JNU): On a lighter note, these are not Krishi Bal Vigyan Kendras that some competition would bring the best out of them. Quality governance cannot be substituted by musical chairs!

Tuhin Harit (ISB): However I do believe that if proper incentive is given, innovation should come out. But yes, without a transparent and disciplined governance, mere competition will not help.



Statutory backing to the AADHAR platform.

Raunak Shah (IIM, Ahmedabad): Has substantial implications for implementation of schemes. The government will be able to create a solid framework for direct benefit transfer of fuel and fertilizer subsidies, checking leakages in the distribution of food subsidies, and passing on benefits under the Jan-Dhan Yojana.

Ishan Anand (JNU): Lot of concerns have been raised regarding the use of AADHAR. We must take those into consideration.

Rural infrastructure


We are implementing the Pradhan Mantri Gram Sadak Yojana as never before. Together with states’ share, totally about Rs2 7,000 crore will be spent on this Yojana in 2016-'17.

Arkajyoti Jana (JNU): PMGSY is a crucial infrastructure project. This would have far-reaching effect on the rural economies if implemented properly.

Tuhin Harit (ISB): Agreed. The root problem in road implementation projects is not the availability of funds, I think it’s more the feasibility of revenue models and how much that inspires foreign/domestic investors to invest. Hybrid model is a relatively bold move. Gadkari sahab seems aggressive. Let’s keep fingers crossed.


I propose to start a National Dialysis Services Programme. Funds will be made available through PPP mode under the National Health Mission, to provide dialysis services in all district hospitals.

Arkajyoti Jana (JNU): It is surprising how issues like malnutrition among children, infant mortality, maternal mortality and related issues did not find mention and action plan in this budget. ICDS saw a huge 50% cut in allocation in the last budget.


Union cabinet has approved the Stand Up India Scheme to promote entrepreneurship among SC/ST and women. Rs500 crore has been provided for this purpose.

Tuhin Harit (ISB): I would like to just add that unless right targeting of deserving SC/ST candidates is made, such schemes would not achieve full potential. Rather than a blanket caste based quota, SC/ST allocation should be based on matrices (financial/geographical situation etc.)



We want to take the next big step forward by focusing on the quality of education. An increasing share of allocation under Sarva Shiksha Abhiyan will be allocated for this.

Tuhin Harit (ISB): While primary education promotion and improving quality of education should no doubt be a focus, what we are missing badly is a focus on research. Consequently, we end up with quantity and not quality. And this is hurting us in all parts of economy.


It is our commitment to empower higher educational institutions to help them become world class teaching and research institutions.

Arkajyoti Jana (JNU): The public higher education sector in particular seems to be in jeopardy after there have been several efforts on part of the union government to scuttle autonomy of public universities. No structural or financial plan for raising quality would work unless these institutes enjoy substantial autonomy.



A National Career Service was launched in July, 2015. Already 35 million jobs seekers have registered on this platform.

Tuhin Harit (ISB): I really hope that this is executed well. Employment market is marred with inefficiencies where the employee generally do not know what employers are looking for or what career paths they can take or what’s their real value in the job market.


Shops should be given the choice to remain open on all seven days of the week on voluntary basis.

Tuhin Harit (ISB): Good move. On a lighter side, though, I think a lot of our kirana retailers are now so used to this one day off that it will be difficult to get them off their indolence :)



We have speeded up the process of road construction. I have proposed an allocation of Rs 55,000 crore in the budget for roads and highways.

Arvind Meena (IIM-B): During the current regime we have seen an uptick in highway construction but difficulties in implementation remain with the Land Acquisition Bill still languishing in the Upper House.


Ten of the 25 non-functional air strips with the Airport Authority of India will also be developed.

Sudheendra Raj Bajpai (ISB): While the initiative is welcome, there will be a need to support the development of low-cost regional airlines to operationalise the new airports and realise real benefits in the long run.


I would like to announce three new initiatives to reinvigorate this (private) sector.

Raunak Shah (IIM-A): Significant announcements to boost private investment in infrastructure. The limited scope for renegotiation of concession agreements in particular has been a cause of concern for a while now.

Sudheendra Raj Bajpai (ISB): All the three moves are welcome and should help in the revival of the infrastructure sector. In addition, it is essential to find ways to free up equity of the private sector, especially locked in stuck up projects because private sector is the key element of the PPP paradigm.



Rate of securities transaction tax in case of options is proposed to be increased from .017% to .05%.

Ruchi Jain (IIM-A): In a country where the retail participation is very low, STT is regressive step. Increasing the STT may be good for government purse but bad one for capital markets.

Real estate


I propose to give 100% deduction for profits to an undertaking from a housing project for flats upto 30 sq. metres in four metro cities and 60 sq. metres in other cities. Minimum alternate tax will, however, apply to these undertakings.

Sudheendra Raj Bajpai (ISB): The provisions are welcome and will hopefully incentivise real estate developers to start focusing on this largely under serviced segment across all tier cities.


For the first-home buyers, I propose to give deduction for additional interest of Rs50,000 per annum for loans up to Rs35 lakh sanctioned during the next financial year, provided the value of the house does not exceed Rs50 lakh.

Raunak Shah (IIM-A): The finance minister could have done a lot more to incentivise first-time home buyers:

(a) Increased the tax deduction on housing loan interest for first-time buyers to Rs 3 lakh from the current Rs 2 lakh;

(b) Extended the applicability of the interest deduction to the time when the loan is availed, instead of the existing rule where it is applicable only after possession of the house is handed over to the buyer;

(c) Currently, the interest deduction available stands reduced to just Rs 30,000 if construction of a house has taken more than three years. Home buyers should not be subject to a lower interest deduction on account of the builder delaying construction of the house. This exception should have been done away with.

Corporate & banking


I also propose to lower the corporate income tax rate of companies with turnover not exceeding Rs 5 crore to 29% plus surcharge and cess.

Ruchi Jain: For small companies, the tax rate is reduced to 29% only and no relief for big companies. Reducing the tax rate by 5% in next budget is next to impossible. Looks like this would be another unkept promise.


I would like to announce further reforms in our FDI policy. The changes proposed are in the areas of insurance and pension, Asset Reconstruction Companies, Stock Exchanges, etc.

Tuhin Harit (ISB): While this move will also help in preventing NPAs, it is important to note, that a new mechanism as such would not do away with a problem of conflict of interest for Credit Rating Agencies who are generally involved in multiple line of businesses and who have no direct liability about NPAs.

Ishan Anand (JNU): This is extremely dangerous. It allows domestic savings to be controlled by MNCs. In the event of a crisis and solvency, the life time saving of people can be lost


Our FDI policy has to address the requirements of farmers and food processing industry.

Ishan Anand (JNU): Nowhere in the world has FDI in marketing has increased employment opportunities. In fact, employment has shrunk.

Tuhin Harit (ISB): The argument as I understand, against FDI in agriculture is that the big firms will collude squeezing the small farmers. However, I’m not sure. Look at how much farmers can benefit if market is made more efficient by elimination of adatiyas, who currently exploit them. This is already been done by Indian firms such as ITC and HUL, and they are doing it for their selfish benefit. And I see a good case for this to be in benefit of MNCs as well.


To tackle the problem of stressed assets in the banking sector, Asset Reconstruction Companies have a very important role.

Tuhin Harit (JNU): A problem in ARCs has been that they have been allowed to hold minimal investment in the trust and withdraw management fee for 4-5 years. During this period, they are able to take out a large part of their investment. Consequently, a bad asset remains bad. Didn’t find any mention of that here.


I have proposed an allocation of Rs 25,000 crore towards recapitalisation of public sector banks

Ruchi Jain (IIM-A): Recapitalisation of PSB is well below the desired level. The Rs 25,000 crore was required even before the large extent NPAs were known. Increasing capital of banks is necessary to give momentum to economy because of money multiplier effect.

Sudheendra Raj Bajpai (ISB): Wilful defaults are estimated to comprise almost 35% of bank NPAs, which have touched astronomical figures. They are a bigger menace than black money whose neither extent nor location is known exactly. Recapitalisation is only a one-off solution and strict provisions should be considered to penalise willful defaulters including recourse to non-attached assets to prevent recurrence.


For speedier resolution of stressed assets, the Debt Recovery Tribunals will be strengthened.

Raunak Shah (IIM-A): This general intent has been expressed in almost every successive budget speech, but in the absence of concrete measures (such as increasing the numbers of DRTs) this statement adds no value.


Arkajyoti Jana (JNU): It is difficult to draw conclusions without looking at the expenditure budget. However the main positive I can see in this budget speech is the overall focus on the rural economy and agricultural infrastructures like irrigation. However, in the current tenure of NDA govt, there has been a lot of positive announcements in terms of plans and schemes. But their effects are yet to be felt on ground. There has been serious lack of focus in the health and education sector. The manufacturing sector also has little to celebrate. Broadly speaking, the spending allocations seem to be difficult to achieve having the fiscal deficit red line at 3.5%.

Ishan Anand (JNU): The expenditure budget is not yet uploaded on the Union Budget website. Difficult to comment without looking at hard numbers. Largely, while the FM has spoken about agrarian distress and rural change, there is no clear signal to walk the talk if we look at the paltry rise in MGNREGA allocation or reduction in food subsidy. Nothing at all mentioned about higher education, fellowships etc. Let us wait for the numbers to come. The speech does not indicate anything significant.

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