By Mithilesh Kumar Sinha
Interim Budget 2019-20 is a Budget that boosts consumption through support to farmers and the rural economy by providing direct income transfer; middle class through tax rebates; and to entrepreneurs through ease of doing business. More importantly, the path of fiscal prudence is not missed while creating growth momentum for the economy.
This is, quite objectively, a fantastic roadmap that unifies and works towards the aspirations of every individual and segment of India’s demography. The interim budget has holistically focused on five key elements -Real estate gets a fillip; monetary support to farmers with assured income support benefitting 12 crore families, taxpayers’ procedural glitches have been eased; assured pensions are back; and tax net is here to stay.
India’s middle class, small traders and farmers are the lifelines of its economic growth. By catering to these ambitions Budget 2019 infuses hopes for millions of dreams.
A 750 billion-rupee ($10.5 billion) farm income support program: Farmers with less than two hectares of land will receive 6,000 rupees ($84) each year. That’s likely to assist about 120 million small and marginal farmers but Rural labourers who toil on farms but don’t actually own any land will not benefit from the government’s big spending plan for farmers. These workers are often already desperately poor, while most state-initiated plans to boost prosperity in the countryside tend to focus on land-owning farmers.mIt tends to ignore the landless farmers who will not be entitled to the annual support of 6,000 rupees.
Income tax payers earning up to 500,000 rupees will get a full tax rebate, while those earning up to 650,000 rupees will not need to pay tax if they invest in the country’s provident funds and prescribed equities. Goyal said this could benefit as many as 30 million middle class taxpayers.
Increased spending on the animal husbandry and fisheries sectors and an interest subvention plan for small-and-medium-sized businesses could benefit companies with exposure to rural India.
A second big announcement in the budget was for a “mega” pension program for India’s informal sector workers with income below 15,000 rupees. The vast majority of the country’s workers are employed in small enterprises, often with little job security and no social security benefits.
The Bombay Stock Exchange’s real estate index climbed as the government reiterated its push for affordable housing and announced new measures that could boost home-buying. Goyal promised a home for every person in India, a country of 1.3 billion people, and proposed to allow investments of as much as 20 million rupees from capital gains for buying two residential houses, compared with only one at present.
Impact: The income-tax cuts would lead to higher spends on discretionary items It is certain that the purchasing power of individuals will rise and the farmers package and interest subventions will add to the rural demand. The relief given to farmers will start showing results in the first two months of the next fiscal. Though farmers would not get a huge amount of money in terms of consumption, it will certainly create a positive sentiment. This Interim Budget would boost overall consumer confidence and play the role of a catalyst for demand generation for branded consumer staples and consumer products. Mega Pension Scheme assuring Rs 3000 per month after the age of 60 will help create a social security net for the unorganised sector workers.
To conclude, This Budget is a calculated call to boost growth through higher disposable surplus in the hands of consumers. It is balanced and targets the wider community — be it the middle-class individuals, the agrarian community or the poor and marginal communities. Despite the outlay of various incentives, frameworks and policies, it is admirable that the fiscal deficit has been contained at 3.4% of the GDP, only marginally higher than the targeted 3.3% for this year.
Despite this being an interim budget for the government, it has all the foresight of a full-fledged budget. Some people have criticised it as an election budget, which it undoubtedly is, as the party is gearing up for elections in May. Overall, this has been a great budget for the aam aadmi—the farmers, the middle class and the vulnerable sections. The finance minister has done an impeccable job in articulating our progress towards laying a strong foundation and must be congratulated for setting the stage for the next phase of growth for India.
