The latest Economic Survey takes pride in taking recourse to behavioural economics rather than classic economics. The former will present ideas of behavioural change that will have serious economic impact—gains. A glimmer of that was seen when Finance Minister Nirmala Sitharaman mentioned, more than once, in her budget speech in the Lok Sabha on Friday, that the government's aim was to bring about “ease of living” in the lives of citizens.
There are many points in the budget, along with digital payments, which she said would make life easier for people in the country. Flash a card or a phone, and payments are done in an economy that was touted to go digital by the infamous demonetisation of 2016. According to the Worldline India's “Digital Payments Report 2018” released in March, the Unified Payments Interface (UPI) based on the mobile phone platform, shot up by 769 per cent in terms of transactions, and a whopping Rs 5.79 trillion in terms of money compared to 2017.
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What was traditionally called welfare, has in some ways, been portrayed as “ease of living” in this year's budget. Talking of the Ujjwala Yojana, the Saubhagya Yojana and the Pradhan Mantri Awas Yojana-Gramin, Sitharaman explained the convenience of clean cooking gas and houses with toilets and electricity in rural homes, as contributing to “dramatically improving ease of their living”. The budget promises 1.95 rural homes these facilities by 2022. Even more demonstrative of the ease injected into rural lives was the drop in time taken to complete construction of houses: from 314 days in 2015 to 114 in 2017-18. What made it possible was the Direct Benefits Transfer.
The decision to virtually make AADHAAR and PAN card interchangeable for filing tax returns must indeed result in a big sigh from many. The amendments proposed to the Income Tax Act 1961 aim at, among other things, promoting a less cash economy, strengthening anti-abuse measures, and removing difficulties of taxpayers. The era of the menacing tax officer who could subjectively deal with those he or she feels have not complied with the tax laws is, hopefully, behind us. “The detached online tax cell, with a faceless, nameless and designation-less person somewhere clinically keying away on a computer keyboard, sounds a big relief” was the way a chartered accountant dealing with many cases on behalf of clients, put it.
The middle income class can hope to breathe a bit freely in their new homes, given the income tax deductions of up to Rs 1.5 lakh over and above the existing Rs 2 lakh on interest repayments on loans up to Rs 45 lakh for houses—the magical number that defines an affordable house! There is a catch to who can actually enjoy this ease of life: those who get their loans before March 2020, and do not shoot the budget of Rs 45 lakh, implying that home buyers in smaller towns are more likely to benefit from this than those in the big metros.
Never before have people been able to take a loan for a luxury, and be rewarded with a tax deduction for that. Now those who buy EVs of any kind can expect to get a further tax break. The green idea needed a major push, and this will make for ease of living, not just for the EV buyers, but also manufacturers, and may give a boost to employment.
Startups—the new whiz kids on the block with their bright ideas of meeting an existing gap and making money out of it, also providing jobs in the process—can also expect to breathe easy, given the government's focus on them.
The finance minister spoke of the farmers' right to ease of living, and huge allocations in the expenditure budget of the agriculture ministry are aimed at providing them the security net through PM-Kisan—Rs 75,000 crore, and pension to farmers over 60. Sitharaman has added to this list of pensioners small traders with a turnover of up to Rs 1 crore a year, with the same premise of affording them ease of living. Some of this sounds like a Targeted Basic Income—a modified version of the Universal Basic Income, an idea whose time, some economists believe, has come.
The additional excise duty on petrol and diesel, the one rupee for environment, may hit millions of people and raise fears of fuelling inflation. The high net worth people may not be happy with the additional tax on income over Rs 2 crore. Costlier gold is going to result in some frowns.
Yet, the stench from open defecation may have gone away substantially. Now, the idea of upscaling the Swachh Bharat Abhiyan to include sustainable solid waste management in every village, could transform rural lives, as well as their beauty. And hopefully, the promised jobs, too, will come.
