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Vijaya Pushkarna
Vijaya Pushkarna

BUDGET 2018

Sans surprises, Jaitley goes all out on rural appeasement

PTI1_31_2018_000171A Union Finance Minister Arun Jaitley | PTI

Concerns of crucial sectors were touched upon in the budget

Finance Minister Arun Jaitley's budget could well have been India's best kept open secret in the last few weeks. The only surprise element was something that the entire Lok Sabha cheered for—a five-year pay hike to MPs, with indexation for inflation, assured by law.

Being the last full budget of the Narendra Modi government ahead of elections to eight state legislatures this year and the Lok Sabha early in 2019, Jaitley ensured that the concerns of crucial sectors were addressed—the angry appeased or seemingly appeased—and the rest had no major grouse.

The salaried had no reason to cheer, and the most vulnerable would get help if they needed it.

The government was gung-ho about growth rate, fiscal management, ease of doing business, inflow of foreign direct investment, and the progress in all that it had undertaken to do the last four years.

The BJP government appears to have found its own MNREGA moment when Jaitley announced what he described would be the world’s largest government-funded health care programme—a flagship National Health Protection Scheme to cover over 10 crore poor and vulnerable families. About 50 crore beneficiaries will be covered with upto Rs 5 lakh per family per year for secondary and tertiary care hospitalisation.

Beyond that, there were few new big bang ideas or proposals, making it a “maintenance” budget of sorts. Priority to agriculture and rural development, infrastructure, and MSMEs were indeed the need of the hour, and only a blind government could have prioritised it any other way. Yet, the minute he was through his speech, the Sensex headed south, and many were left wondering who would actually get what.

The farm sector has got a big push. The Minimum Support Price has hitherto been the prerogative of rabi crops. This budget commits to MSP for kharif crops at the rate of one-and-a-half times the cost of production. Though farm policy analysts and farmers say the prices simply don't match up, it is one major step forward. Other things for the agriculture sector are rural haats that will be upgraded to Gramin Agricultural Markets, 'Operation Green' to manage volatile prices of potatoes, tomatoes and onions, and two funds of Rs 10,000 crore each for fisheries and animal husbandry sectors. These schemes may benefit some farmers later. But these are unlikely to make a significant dent into the agricultural distress. Most importantly, they will not help double the farmer's income in the next two years, an assurance given to them by Prime Minister Modi.

Rural development is an all-pervasive sector that could do with a budget of its own, a budget that is more than that of the government of India. The budget talks of loans to more women self help groups, and more free gas connections, power supply and toilets for targeted beneficiaries.

In a move that will take care of Maoist violence as well as development, Jaitley announced Ekalavya Residential Schools in all the tribal blocks by 2022. It also made way for more affordable houses under the Prime Minister Awas Yojana, in addition to better access to drinking water and more link roads in villages.

The job creating potential of most of the programmes was part of the budget. The finance minister pointed this out as he mentioned the health insurance scheme, and benefits to MSMEs. In many cases, the government decided to step in with partly picking up the salaries of those who are employed.

The BJP-led NDA government has consistently looked to add to their revenues wherever they found people earning or gaining. And so it was that every time the crude prices dropped since Narendra Modi became the prime minister, his government slapped excise duty, and in the end, the benefit of deregulated petroleum drive was never passed on to the consumers. When it came to education or Swachh Bharat schemes, the government slapped a cess along with income tax. People were asked to give up subsidies, interest on savings was lowered constantly, though inflation at the consumer level was nowhere visible.

Now, the government is actually hard-pressed to manage its fiscal deficit. As election countdown begins, the mood of the nation suggests a bit of gloom with regard to farm distress, jobless growth and manufacturing almost coming to a grinding halt. The government has no choice but to indulge in huge spends. Petroleum prices are no longer giving them any hedge. Hence, the government has decided to bring in 33 per cent hike in education cess—up from three to four per cent. The 10 per cent tax on long term capital gains exceeding Rs 1 lakh is also in similar lines.

Much of the budget was an extension of previous ones, with more targets added to the prime minister's favourite programmes that are largely driven by technology, sprinkled with digital razzmatazz and gift wrapped with aspirational content that will reveal itself in the future.

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