In the face of threatening global financial squalls, the Budget provides credibility, a steady course for steering the economy, and welcome improvements in tax administration. The market initially plunged during FM Arun Jaitley's speech but recovered when he stuck to his fiscal consolidation schedule, outlined ways to end retrospective taxation (and settle big outstanding cases), avoided anticipated changes in service tax and capital gains tax, and outlined ways to greatly reduce tax disputes.Cars, cigarettes, branded garments, air travel will become more expensive, while footwear, solar lamps and routers are slated to be cheaper following a host of changes in the tax structure in the Budget for 2016-17.

As a result of additional levy of Krishi Kalyan and infrastructure cess on all services, activities including eating out and payment of bills will also become more expensive.

Continuing the trend set by his many predecessors, Finance Minister Arun Jaitley today imposed up to 15 per cent excise duty on all tobacco products.

Following is a list of items that will turn costlier:

1.Cars

2.Cigarettes

3.Cigar

4.Tobacco

5.All services like bill payments, eating out, air travel

6.Ready made garments and branded apparel of more than Rs 1,000

7.Gold and Silver; jewelery articles excluding silver

8.Water including mineral water, aerated water containing added sugar or sweetening matter

9.Goods and services above Rs 2 lakh in cash

10.Aluminum foil

11.Air Travel

12. Plastic bags and sacks

13.Ropeway, cable car rides

14.Imported imitation jewellery

15.Industrial solar water heater

16.Legal services

17.Lottery tickets

18.Traveling by hiring stage carriage

19.Hiring of packers & movers

20.E-reading devices

21. Instruments for VoIP (Voice over Internet Protocol)
Following is a list items that will turn cheaper: 

1.Footwear

2.Solar lamp

3.Router, broadband modems and set top boxes, Digital video recorder and CCTV cameras

4.Hybrid electric vehicles

5.Sterilised dialyser

6.Low cost houses with less than 60 sq mt carpet area

7.Hiring of folk artists for performance

8.Refrigerated containers

9.Pension plans

10.Microwave ovens

11.Sanitary pads

12.Braille paper.

The big problems facing the economy are not domestic. Emerging markets are crashing in tandem with the Chinese slowdown. Deutsche Bank, Europe's biggest bank, now has a price-book ratio of 0.4, as bad as that of Indian public sector banks. US bank profits are crashing. 
A major global slowdown seems on its way. If so, Indian exports may fall further, and Chinese dumping may increase. The mass exit of foreign portfolio investors can wound financial markets. If even a fraction of these fears come true, all Budget figures will become irrelevant. Instead of aiming optimistically for rapid growth, India may have to hunker down for sheer survival. 

Amid debate over balancing growth and financial management, Finance Minister Arun Jaitley today adhered to the fiscal consolidation roadmap by proposing to keep the deficit at 3.5% of GDP in 2016-17. He also assured that development agenda will not be compromised and a committee would be set up to review the working of Fiscal Resposibility and BudgetManagement (FRBM). The fiscal deficit in current fiscal has been estimated at 3.9%, which will be brought down to 3.5% in next fiscal. "While doing this I have ensured that development agenda has not been compromised," Jaitley said in the next fiscal's Budget speech. Total government expenditure in next fiscal would be Rs 19.78 lakh crore. Of this, Rs 5.50 lakh crore would go towards Plan expenditure and another Rs 14.28 lakh crore towards non-Plan expenditure. The revenue Deficit for current fiscal has been bettered to 2.5% of GDP, from the budgeted 2.8%. Jaitley further said that in view of the uncertainty and volatility in global markets, time has come to review the FRBM Act. A committee to review the implementation of FRBM would be set up, he said, adding that the government will also work with the state governments towards doing away with the distinction between plan and non-plan expenditure. Last year Jaitley had delayed the fiscal consolidation roadmap in order to build infrastructure by boosting public investment. As per the deficit roadmap announced by Jaitley in last budget, fiscal deficit was to be brought down to 3.9% in current fiscal and further to 3.5% by 2016-17. The deficit was to be lowered to 3% by 2017-18. As per the earlier roadmap for fiscal consolidation, the deficit was to come down to 3% by 2016-17. The Economic Survey tabled in Parliament on Friday had said that "credibility and optimality" argued in favour of sticking to deficit target of 3.5% of GDP for 2016-17, indicating some room for an upward revision. "There are very good arguments for a strategy of aggressive fiscal consolidation...And equally good arguments for a strategy of moderate consolidation that can place the debt on a sustainable path while avoiding imparting a major negative demand shock to a still-fragile recovery," it had said.

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