Ad­mirable Bud­get, Walks the Tightrope Skil­fully

The fo­cus on youth, women and the vul­ner­a­ble puts all the pieces of the jig­saw puz­zle in or­der

The Economic Times - - Front Page -

This Bud­get is dif­fer­ent in di­verse re­spects. For in­stance, it came in the wake of a huge dis­rup­tive re­form in the form of the de­mon­eti­sa­tion drive. That had an im­pact on con­sump­tion spend­ing, which had to be ad­dressed.

Next, it’s the last Bud­get be­fore a full-scale roll­out of the na­tional goods and ser­vices tax (GST). Hence, mak­ing any es­ti­ma­tion of in­di­rect tax rev­enues is dif­fi­cult since the de­ci­sions of the GST Coun­cil are still pend­ing. Then, it is also the first time that the rail­way bud­get has been merged in the Union Bud­get.

The global winds of a strong dollar, the risk of cap­i­tal out­flows and grow­ing pro­tec­tion­ism pro­vided the back­drop to the Bud­get that fi­nance min­is­ter Arun Jait­ley de­liv­ered on Wed­nes­day.

In the con­text of the for midable macro chal­lenges, the Union Bud­get has achieved an ad­mirable bal­ance of sev­eral con­sump­tion­boost­ing mea­sures, com­bined with g rowthori­ented ex­pen­di­ture and, yet, re­main­ing fis­cally pru­dent.

The con­sump­tion boost will come through re­lief on direct taxes for the mid­dle class. The growth stim­u­lus is clearly manifest through record spend­ing pro­posed for in­fra­struc­ture that in­cludes roads, ports, ir­ri­ga­tion and rail­ways to the tune of al­most ₹ 4 lakh crore. This would have sec­ond- and third-or­der ef­fects on al­lied in­dus­tries and em­ploy­ment cre­ation. The Bud­get also an­nounced key bold re­for ms, such as the abo­li­tion of the For­eign In­vest­ment Pro­mo­tion Board ( FI PB), which s hould b r i ng cheer to for­eign i nve s t o r s . Im­prov­ing In­dia’s rank on the ease of do­ing busi­ness has been a high pri­or­ity for this gov­ern­ment, and such re­forms surely go a long way in en­sur­ing that.

The Bud­get is es­pe­cially strong on its em­pha­sis on agri­cul­ture and ru­ral de­vel­op­ment. In­dia can­not pros­per un­less ru­ral and agri­cul­tural house­holds do not see sub­stan­tial gains in their in­comes and wel­fare. The fact that credit to agri­cul­ture will top ₹ 10 tril­lion is very im­pres­sive. The en­act­ment of a model con­tract farm­ing law would also be a big pos­i­tive for the farm sec­tor.

The spirit of in­clu­sive growth is re­flected in var­i­ous schemes for the youth, women and the vul­ner­a­ble, and also in widen­ing of the am­bit of af­ford­able hous­ing. Skilling, ed­u­ca­tion and health have all got much-de­served at­ten­tion in this Bud­get. The in­crease in the funds al­lo­cated to the Ma­hatma Gandhi Na­tional Ru­ral Em­ploy­ment Guar­an­tee Scheme (MGNREGS) is tes­ti­mony to its im­por­tance as a poverty al­le­vi­a­tion tool as well as a ve­hi­cle to help in cre­ation of ru­ral as­sets. Cor­po­rate In­dia had ex­pected a re­duc­tion in tax rates. The Bud­get de­liv­ered this to a large class of small and medium en­ter­prises, which make up 96% of all com­pa­nies. This sets the stage for further re­duc­tion of cor­po­rate rates in the fu­ture.

Fi­nally, this is also the first time that sig­nif­i­cant steps have been taken to clean up po­lit­i­cal fund­ing by ini­ti­at­ing more trans­parency mea­sures.

The Bud­get is es­pe­cially strong on its em­pha­sis on agri­cul­ture and ru­ral de­vel­op­ment. In­dia can­not pros­per un­less ru­ral and agri­cul­tural house­holds do not see sub­stan­tial gains in their in­comes

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