The immortal line Desamante matti kadoi, desamante manushuloy was uttered by the great Telugu poet Gurajada. It translates to, “a country doesn’t mean its terrain or land but a country means its people.” The government, Budget and other reform policies should be for the country, its people and their betterment.
Economists measure the impact of a Budget by the GDP growth, stock market response or the FDI inflow. But wouldn’t it be better if the analysis is from the ‘aam admi’ perspective? Generally, the last Budget before the next election is populist, irrespective of the party in power.
Moreover, the pro-rich image given to the government by the opposition and the report of unequal wealth distribution last year convinced everyone that this Budget would be all about freebies and wooing the public.
Ease of Living
Prime Minister Narendra Modi’s speeches at the Davos summit made it clear that the focus of this Budget would be on raising the quality of living of the common person. What constitutes this Ease of Living? Anything that betters the quality of life of the common person.
As expected, roti, kapda and makaan are the primary things but along with that banking, electricity, healthcare and skilling have become core components, which make the life of a common person better. Hence, the year needed to have a HI-FIST Budget.
H – Housing
I – Infrastructure (roads, healthcare, transport, electricity)
F – Food & Farmers
I – Inclusion (financial & digital)
S – Skill Development
T – Tax breaks for MSMEs, middle-class
The Economic Survey indicated that our economy will reap the fruits of conscious economic shocks given to it in the last two years and the GDP growth rate will be above 7% for the next year.
The prime focus of this Budget seemed to be farmers as they are in distress due to successive droughts and failure to find right prices for their produce. The government has taken steps in that direction by increasing the MSP on a few crops to 1.5 times. Credit available to agriculture has also been increased. Schemes like Operation Green to improve logistics and upgradation of rural haats have been launched.
When more than 60% of our population lives in village, the government’s increased focus on rural infrastructure will boost ease of living. It plans to spend nearly Rs 14.34 lakh crore on livelihood and infrastructure creation. This is going to generate a lot of jobs in rural India.
This combats the unemployment problem in two ways. One, it has the potential to stem migration and let farmers focus more on agriculture and allied activities. Second, the investment will create many new jobs in rural India and the manufacturing sector will absorb this workforce.
If statistics are to be believed, in 2018-19 it would generate, “321 crore person days, 3.17 lakh km of rural roads, 51 lakh new rural houses, 1.88 crore toilets, and provide 1.75 crore new household electric connections”
Further, the allocations to some of the government schemes include:
• 51 lakh houses to be constructed under the Prime Minister Awaas Rural Scheme
• Prime Ministers Ujjwala Scheme’s target raised to 8 crore poor women from 5 crore
• Pradhan Mantri Saubhagya Yojana gets Rs 16,000 crore to construct 1.88 crore toilets
• Kisan Credit Card extended to fisheries and animal husbandry
• MNREGA allocation increased to Rs 55,000 crore from Rs 48,000 crore
• Mission Ayushman Bharat, a new healthcare scheme, to provide cover of up to Rs 5 lakh for 50 crore Indians
People are of opinion that middle-class is the most affected. Since the revenues from the GST are falling, possibly the government felt that cutting taxes was a risky move. But it provided a Rs 40,000-standard deduction on travel and medical expenses.
Let us look at how the income tax has changed over the years from 2014 before we conclude that the middle-class has been ignored. (see Income Tax Structure graphics table)
Due to the GST, costs of a majority of items have come down. Demonetisation has made interest rates on loans cheaper. A person with a home loan of Rs 20 lakh saves Rs 60,000 in a year due to interest rate reduction.
The government is investing hugely in road, rail and metro. Plans to build new airports, apart from the Udan scheme, have been announced keeping in mind the middle-class of the country. The increased tax base is expected to boost government’s revenues in the near term, which in turn, may provide room for the government to ease the burden on the middle-class.
The big positive from the Budget is that it did not promise many freebies to win votes of the people but did take many initiatives for Ease of Living. It shows the government is still focused on quality spending that yields long-term gains to the nation.
(The author is a spokesperson of BJP, Telangana)