Editorial: Budget loaded with political message
By announcing massive infra push in poll-bound States, Sitharaman has sent a clear political message
The Union Budget is not always about management of the economy. It can also be about managing political optics. Finance Minister Nirmala Sitharaman appears to have attempted just that by extending special treatment to the poll-bound States of West Bengal, Assam, Tamil Nadu and Kerala. By announcing a massive infrastructure push in these States, she has sent a clear political message at a time when the BJP has raised its stakes in the coming round of Assembly polls, particularly in West Bengal and Tamil Nadu. The largesse includes mega road and railway projects, with Tamil Nadu alone garnering an expected investment of Rs 1.03 lakh crore, while the long-pending pressing issues of other States failed to attract the attention of the Centre. Since the country has been grappling with the devastating impact of the coronavirus pandemic, it was widely expected that the Budget would focus on healthcare and infrastructure spending. An outlay of Rs 2.23 lakh crore for the healthcare, reflecting an increase of 137% over last year, is completely justified, given the need to ramp up the response systems. The allocations show that the government has finally realised that infrastructure spending will create jobs and infrastructure development will lead to efficiency. Fears are being raised over the possible impact of the Agriculture Infrastructure and Development Cess (AIDC) of Rs 2.5 per litre on petrol and Rs 4 per litre on diesel. Though Sitharaman has promised that there would be no additional burden on the consumer, there is a sense of scepticism over how the move will pan out.
No significant changes have been made in the area of income tax, though taxpayers were expecting some benefits because the Covid-19 distress has burnt their pockets. The expectations of tax incentives to increase spending have been dashed. By announcing that 1,000 more agriculture product marketing committees (APMCs) will be linked to e-national agriculture market (e-NAM), the Minister has sent a subtle message to agitating farming groups that the government has no intention of dismantling an established APMC system. This was certainly the toughest Budget yet for the NDA government as it navigated the twin challenges of steering the economy out of an unprecedented recession while ensuring more resources to fight the century’s worst pandemic. Though the farm sector received some attention, there were no major announcements that could help address the ongoing agrarian unrest over the controversial farm laws. There were also no significant announcements on boosting consumption in the rural economy. While the government aims to garner Rs 1.75 lakh crore through divestments in 2021-22, it remains to be seen whether the central public sector enterprises will be eventually privatised, given the strong opposition to the policy from several quarters.
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