By Kiran Mazumdar Shaw
The Budget, ahead of the general elections later this year, was expectedly populist in nature and announced several measures for farmers, informal sector workers and the middle class.
Relief for Farmers
To relieve farmer distress the Budget unveiled the Pradhan Mantri Kisan Samman Nidhi, an assured income support program, for 12 crore small and marginalized farmers with an outlay of Rs 75,000 Cr per year. This is a good move, however, with an annual relief of only Rs 6,000 per year it may not make any meaningful impact.
Animal husbandry and fisheries farmers will benefit from the extension of a 2% interest subvention using the Kisan Credit Card for loan. Similarly the extension of 2% interest subvention for the full loan term to farmers seeking loan rescheduling on account of natural calamities will ease off pressure faced by them. In case of timely repayment, they will get an additional 3% incentive for the entire period of the reschedulement of their loans.
Besides measures to help farmers get timely credit for cultivation, the Budget allocated funds for building roads and homes in rural areas. However, there was nothing to push agri-technologies that enable transparent price discovery in commodity markets as well as help farmers increase crop yields.
Tax Boost to Consumption
An Income Tax rebate for up to Rs 5 lakh and hiking the standard deduction to Rs 50,000 from Rs 40,000 will translate into higher disposable income for the salaried and middle classes and help boost urban demand, which augurs well for the overall economy.
Widening the Social Net
The pension scheme for workers in the informal sector, Pradhan Mantri Shram-Yogi Maandhan, is welcome as it will provide a social security net for nearly 10 crore Indians. Workers in the sector will get a pension of Rs 3,000 per month from the age of 60, as a part of this scheme. The money will be directly transferred to the bank accounts of these beneficiaries. Workers will have to contribute a small amount during their working age after joining the scheme, for which Rs 500 crore has been allocated in this Budget.
This scheme will also be the first step towards generating formal data on the kind of jobs being created in this sector.
The allocation for the welfare of Scheduled Castes and Scheduled Tribes has been substantially increased, which will help in improving the condition of these marginalized communities. The budgetary of allocation Rs 60,000 crores for MGNREGA for the economically weaker sections of society will also bring some relief.
In the area of Education, the budget allocation for the National Education Mission has gone up. Similarly, the additional allocation for the Integrated Child Development Scheme will provide better preschool education and primary healthcare as well as improve nutrition in young children and their mothers.
The allocation of Rs 1,330 Cr for the Mission for Protection and Empowerment for Women is timely and will help in creating a safe and secure environment for women.
Push to Digital Economy
The Budget had some positive announcements to help accelerate India’s transition to a robust digital economy. Over the next five years, it aims to create 1 lakh Digital Villages, which will have digital infrastructure, including Internet connectivity.
It has proposed that the Income Tax department will be processing all IT returns within 24 hours and all refunds will also be issued simultaneously. Going forward all verification and assessment of income tax returns selected for scrutiny will be also done electronically without any personal interface between taxpayers and tax officers. This is a progressive step as it will ensure privacy and objectivity and will make the Income Tax Department more assessee friendly.
Fiscal Discipline Maintained
Overall, the government did well to balance the populist tone of the Budget by signalling its commitment to stick to the road of fiscal discipline, pegging the fiscal deficit at 3.4% of GDP, slightly higher than the targeted 3.3% for FY19.
Not Enough for Startups
The Budget could have done more to strengthen the existing startup ecosystem. It was disappointing to see that the startup sector did not receive any relief in terms of a 10-year tax holiday for angel investors. However, the announcement of a national programme on Artificial Intelligence is a welcome move. Such an initiative will go a long way in addressing the skills gap in this area.
The Budget also failed to announce GST exemption on drugs to treat cancer, which is an urgent need given the huge disease burden that India faces.
In the final analysis, this Budget has tried to address various stakeholder groups in the run-up to the elections without unveiling any big idea.