Glimpses of India’s Budget 2018
MUSCAT: “Expect the unexpected” was the dictum, set by Arun Jaitley, the Finance Minister and Minister of Corporate Affairs under Prime Minister Narendra Modi, in all his earlier budgets. Comprehensive reforms revealed earlier under ‘ Transform India’, ‘Make in India’, ‘Digital India’, ‘Affordable Housing’, ‘Rural Sanitation’, ‘Political Funding’, ‘Banking Reforms’ and ‘Tax Simplification’ soared the hopes of everyone to see a New India.
Overnight Demonetisation of high value currencies (purging out the black money and garnering high bank deposits and tax collections), GST introduction (bringing uniformity in tax collections and faster movement of goods due to check-posts closure) and implementation of Aadhar Card (creating common identity) were the triggers ‘To Make India Better India’.
India was looking for something sensational to happen in Budget 2018, but Arun Jaitley paused the big reforms and presented something equally good, intended to benefit the rural masses. Notwithstanding the sober and subdued tone of the Budget, it is heartening to note that Indian economy’s scorecard stands tall amongst the growing economies, obviously due to the momentum gained out of recent reforms and favourable oil imports in the recent years.
Green India
The farming community is the major beneficiary out of this budget. Primary reward is by way of higher returns for their efforts. The concept of MSP (Minimum Support Price) that guarantees a return of 50% over the production cost will be extended to Kharif Crops this year, while for Rabi crops, it was implemented last year itself. By 2022, this return is set to double, in fulfilment of the poll promise. MSP will be fixed on scientific basis based on price and demand forecast, use of futures and options market, warehousing, exports and imports.
Kudos to the budget team for walking an extra mile in the path of Agriculture and for creating long-term solutions. No doubt, these reforms shall ensure ‘Green India Great India’, a reality.
Health for all
Another heartening feature is the proposal to launch two major initiatives under ‘Ayushman Bharat’ that aims to bring good health system closer to poor homes. First is the creation of 150,000 wellness centres that provide comprehensive health care, maternal and child health services, free medicines and diagnostic facilities.
Secondly, health coverage insurance for 10 Crore poor families (50 crore beneficiaries), with coverage up to Rs 5 Lakhs per family, is to be provided by the government. Clarity is still lacking, as the entire logistics, premium, (recurring nature) and tie-up with insurance companies have to be worked out. Hope an ombudsman will be placed to ensure that through this scheme, medical care reaches the people at the right time, without procedural delays and with built-in controls to prevent any misuse. Some states who have selectively implemented similar schemes may have few lessons and cautions to share.
Vision, mission and task in education
Human resources are rightly chosen as another key area for the nation’s growth. Realising the potential in each individual is the profound vision and giving quality education is the ultimate mission of the government. Better training of teachers, digital methods, upgradation of teaching aids, stepping up of research facilities, setting up of Institutes of Eminence and Schools of Planning and Architecture and the introduction of research fellowships are the chosen tasks.
Social welfare schemes
The budget has come out with a new wave of thought in proposing to create 115 model districts, with better infrastructure to improve the quality of life of people. Good facilities on health, education, nutrition, skill upgradation, financial access, irrigation, electrification, drinking water and sanitation will be made available. A host of other measures such as building more toilets, personal accident coverage for the poor, providing micro insurance and pension schemes for 60 Crore basic accounts and education for girls are intended to create happy living everywhere.
Industry, employment and infrastructure
Job creation is a paramount necessity and MSMEs (Medium, Small and Micro Enterprises) play a pivotal role in the generation of employment. Hence, more Funding support and subsidies are earmarked for this sector. To incentivize further, on a selective basis, the government shares the Employees Provident Fund contribution and also allows higher Income Tax deductions relating to wages of new employees.
Tax proposals
Tax changes have come out with a mild dose this time, concessions are not highly attractive and levies are not very bad.
Reduction in Corporate Tax to 25% for enterprises having turnover up to Rs. 250 Crores, Higher Standard Deduction at Rs. 40,000 for the salaried class, Tax Exemption of interest income up to Rs. 50,000 for senior citizens, disallowance of cash payments beyond Rs. 10,000 for trusts and 10% tax on Long-Term Capital Gains beyond Rs 100,000 on Equity Investments are some of the snippets in taxation.
On the whole, the Budget 2018 is pregnant with so many features towards long-term growth, development and stability. Thoughtful measures have been carved in, with an eye on the rural economy, encompassing agrocare, medicare, educare and sociocare schemes.
The writer A. V. Manohar is the chief financial officer at Oman & Emirates Investment Holding Co.