Budget 2018 by Arun Jaitley has been the talk of the town. I have come around an interesting joke that claims to summarize the recent budget.
Lower class gets Subsidy !
Upper class gets Rebate !!
Middle class gets only TV Debate !!!
Jokes apart, let’s look into the important highlights of recent budget.
Media has coined a term Modicare for its policies such as expanding the ambit of Ujjwala Scheme (80 million poor families will be given free cooking gas connections), announcing the Ayushman Bharat Programme (Health Insurance Coverage of up to Rs.5 lakh for a family per year, and setting up of health and wellness centres) or PF subsidy for formally employed women coming down to 8%. Senior Citizens have also gained from this budget. The rest of the salaried class, undoubtedly, have been imposed with more tax. Budget also promises lesser income tax and better credit flow for smaller businessmen. Highly criticized is the LTCG tax (long term capital gains exceeding Rs.1 lakh will be taxed at 10% without indexing) which has caused turmoil in stock markets and robbed off pockets of middle class section of the society.
Fiscal deficit of 3.3% of GDP for next year is much higher than the ideal 2.5% for the central government as per the recommendations by N K Singh committee. If the government is not able to maintain, it will lose its credibility. Although, our economy has not been able to maintain 3% growth even in good years leading to serious questions on the ruling dispensation. Expected gross tax revenue seem to increase by 16.7 %, which is indeed a high figure but we don’t know how GST revenues will behave. There is nothing in the budget that can directly stimulate investment except for benefits to micro, small and medium enterprises (MSMEs). With no new investments ventured in through budget there is lesser possibility of required jobs creation, an alarming question raised by C. Rangarajan, the former governor of RBI.
India is unique in the sense that it’s a broadly agrarian economy which has people coming from both the highest and lowest class of income distribution. Catering to both sections of society which are starkly different from each other is a challenge in itself. Higher expenditure on health and education was required. According to C. Rangarajan, the budget for 2018-19 was presented against the background of “slowdown in growth, inadequate private investment and distress in agriculture”. Few of the issues were addressed but not fully. The success criteria of the present budget depends upon how well the policies (expenditure programmes) will be implemented.
What about the Aam Janta or the middle class? There are simply no benefits for them. Most of the middle class loves Modi. These are the people who cheer for Modi in all his actions or policies, and claim that Modi’s critics are nothing but Anti-Nationals. Modi with this budget, has been brave enough to displeasure his so called bhakts or devotees.
It has been projected that this budget was Modi’s run for 2019 elections. Huge importance has been given to the lowest strata of the population, the garib and kisan aiming to include them in the voter bank. The middle class sections of the population are already under his influence. It is being said that BJP is trying to woo the poor sections who currently rely more on congress than on BJP. They are trying to impress the competitor’s voter base which is different from their usual traditional methods.
BJP generally upholds a candidate who is sure to win, by not being bothered about other things (For instance no Muslim candidate in Uttar Pradesh while having a Muslim candidate for Jammu and Kashmir). BJP’s traditional voter base lies with urban middle class Non-Muslims. Either BJP is too confident with their traditional voter base or they are not at all confident and they want to spread their potential voter base. Will this initiative help? We don’t know, for that we have to wait for 2019 election results.