The Interim Budget for 2019-20 presented by Finance Minister Piyush Goyal, on February 1, 2019 in the Lok Sabha is the Bharatiya Janata Party-led National Democratic Alliance government’s last Budget before seeking re-election just few months from now. The printed text in the Budget has addressed concerns of a section of the farmers, the salaried class particularly targeting the middle class in the society, which actually comprises the highest percentage of vote bank and as such this can be summed up as a populist budget for once under the regime of Narendra Damodardas Modi.
As mentioned, the Interim Budget has benefited only a section of the farmers’ community by providing relief to small and marginal farmers up to rupees 75 thousand crores and interest subvention up to 5% in the event of natural calamity and the approval of Prime Minister Kisan Yojana, where Rs 6000 per annum has to be given to every farmer having up to 2 hectares land. It is applicable from September 2018 and the amount will be transferred in three installments. This is of course keeping in mind the attack by the Opposition Indian National Congress which has taken the fight for the cause of the aggrieved farmers in the country on a war footing.
The salaried class, particularly the middle class citizens, who were caught in the confusion of Demonetization and Goods and Services Tax were jubilant as the Budget provides for the exemption from income tax for income up to 5 lakhs.
The Budget justified that both these are significantly consumption positive and augur well for overall tax collections in the Financial Year (FY) 20. Meanwhile there is a marginal slippage in fiscal deficit target for FY 19, the approach towards consolidation has been diluted for FY20 on account of farmer relief. The net borrowing programme doesn’t appear alarmingly high. Overall this is a good budget that delivered on expectations in an election year.
While the reaction of the Prime Minister is significant how it is keeping the election year in mind, when Modi congratulated the middle class, considered a supporter of the BJP, for relief in income tax rates, he also stated that it is the liberal nature, honesty and law-abiding nature of the upper middle class and middle class due to which taxes are paid and welfare measures are taken for the poor.
Modi said there had been a demand for long to raise the income tax exemption limit to Rs 5 lakh and his government has done so. He said that efforts by previous governments had only benefited two-three per cent of farmers but the PM-Kisan programme of his government will benefit 12 crore farmers who have land up to 5 acres.
In another significant move to assure Housing for all, the Budget made recommendations to GST Council for reduction GST rates for Home buyers, with full tax rebate upto 5 lakhs annual income after all deductions, also exempt on tax on second self-occupied house.
In the case of the North Eastern Region, allocations has been proposed to be increased to Rs 58,166 crore in 2019, it will be a 20 percent rise over the previous year.
This is of course keeping in mind the mounting pressure from the region demanding scrapping of Citizenship (Amendment) Bill which was passed in the Lok Sabha on January 8, 2019 and is pending in the Rajya Sabha.
Reacting to this, Tripura Chief Minister Biplab Kumar Deb while congratulating the Central government for increasing budget allocation for the North-East and MGNREGA and for providing income tax rebate said it was a matter of great happiness that the budget allocation for the eight northeastern states was increased by 21 per cent.
However, the Budget also exposed that the NDA government on its completion of the term also failed to figure out how to generate employment, the most ambitious flagship programmes of Skill Development and Make in India were not well executed and have failed to feel the nerves of the masses, who are unskilled, while the schemes aim at building the gap of being self-sufficient to reached the global market, lack of man power, resources person and the poor work culture was not addressed.
Whoever forms the next government will inherit a huge figure of unemployment, therefore, the manifestoes of all political parties, which will actually take forward the said proposed Interim Budget for 2019-20, need to be clear on how to generate employment.