Admirable Budget, Walks the Tightrope Skilfully
The focus on youth, women and the vulnerable puts all the pieces of the jigsaw puzzle in order
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