Budget 2017 will be presented in the most uncertain times. Here’s why

It is going to be a bed of thorns when Finance Minister Arun Jaitley will present Budget 2017 in the parliament on February 1. This Budget is going to be one of the toughest for Prime Minister Narendra Modi-led Indian government as the country is facing uncertain times.

Events such as demonetisation, slowing economy, etc will bear an impact on Budget 2017. In the previous budgets, finance ministers had total insights into corporate balance sheets, economic performance, etc but since the budget has been shifted to Feb 1, this may prove to be a bane for Jaitley.

"This (2017-18) budget would be presented in most uncertain times and is unpredictable,” NR Bhanumurthy, professor at National Institute of Public Finance and Policy (NIPFP), told ET.

Jaitley will possibly have dearth of data. These are the looming factors

Demonetisation
The RBI has failed to give any reliable data on the real impact of demonetisation. The note ban decision impacted several sectors heavily such as auto industry, which saw drop by 19% in December, worst in 16 years.

“The last quarter of fiscal 2017 will be weak,'' Ajit Dange, head of portfolio management services, domestic business, at SBI Mutual Fund, told ET.

Tax
The year 2016-17 will see economic growth falling way short of estimates. However, the Indian government revenues will overshoot targets thanks to a relentless pursuit of evaders and amnesty schemes.

The crackdown on suspicious accounts and illegal income hoarders will carry on. Even GST is expected to being some respite.

SBI Mutul Fund's Dange told ET job losses as the shift to GST will shut down a number of small industries in the informal sector that employs over 90% of India's workforce.

"Many of them (small industries) will be unable to evade taxes and will become uncompetitive. Tax evasion was the only source of profitability for many of them,” he told ET.

Oil
Oil is moving up steadily. The Indian crude oil basket has risen from $39.88 in April 2016 to $54.24 in the first week of January, according to the oil ministry's petroleum planning and analysis cell.

"We expect international oil prices to rise to near $60 in 2017 and about $65 in 2018,” an energy analyst with a foreign broking firm told ET on condition of anonymity.

India imports more than 70% of its oil, and high international prices are the single biggest factor after monsoon rains that impact the economy. The volatile nature of both rains and oil prices are enough to give sleepless nights to finance ministers and can spoil the most meticulously planned budgets.