The Union Budget 2018-19 which held humble expectations and was the first post-GST and the last full Budget of the Government led by Prime Minister Narendra Modi before the country goes to polls in 2019 was widely expected to be rural centric and was bang on expectations, the budget laid emphasis on strengthening agriculture and rural economy, provision of good health care to economically less privileged apart from which focus was on senior citizens, infrastructure creation and improvement in the quality of education in the country.
The government is committed towards taking Ease of Doing business further by stress on ‘Ease of Living’ for the common men of this country, especially for those belonging to poor & middle class of society. The Union Minister for Finance and Corporate Affairs, Arun Jaitley, while presenting the General Budget 2018-19 in Parliament said that Indian society, polity and economy had shown remarkable resilience in adjusting with the structural reforms.
Finance Minister informed that presently Indian economy is a 2.5 trillion dollar economy and expected to become the fifth largest economy in the world very soon. IMF has projected that India will grow at 7.4% in coming year. He reiterated that India will grow at 7.2-7.5% in the second half of the 2017-18. Exports are expected to grow at 15% in 2017-18.
Markets seem to be comfortable with the revised Fiscal Deficit estimates for 2017-18 of `5.95 lakh crore at 3.5% of GDP and the projections of a Fiscal Deficit of 3.3% of GDP for the year 2018-19. The steps taken by the government for reducing the cash economy and for increasing the tax net have paid rich dividends. The growth rate of direct taxes in the financial years 2016-17 and 2017-18 has been significant. While last year a growth of 12.6% was registered in direct taxes, in the current year, the growth in direct taxes up to January 15, 2018 has been 18.7%.
Rural India was the theme with the government committed to recognize agriculture as an enterprise and to help farmers produce more from the same land parcel at lesser cost and simultaneously realize higher prices for their produce. It
further stressed generating productive and gainful on-farm and non-farm employment for the farmers and landless families. Announcements on increase in agriculture credit, stopping the price volatility of perishable commodities, electricity connections, MSP of crops, Swachh Bharat Mission etc were all in the same direction.
While, there was no change in the structure of income tax of individuals, for salaried class standard deduction `40,000 has been introduced. Corporate tax for 2018-19 has been cut to 25% for companies with revenue up to `250 crore. The much anticipated and highly feared LTCG is now back but with a much lesser impact as envisaged. The best part is the grand fathering of the gains up to January 31, 2018.
Senior citizens are again one of the big beneficiaries. Increase in tax exemption limit for interest income from banks and post offices to `50,000 and increase in tax break on health insurance and medical expenditure would give a big relief to them.
For corporates a move to shift from ‘AA’ to ‘A’ grade ratings corporate bonds as eligible for investments will provide additional avenue to raise funds. Moreover as major disinvestment initiative Government insurance companies have been proposed to be merged into a single entity and subsequently listed in the stock exchange.
Swami Vivekananda had also envisioned decades ago in his Memoirs of European Travel,
‘‘You merge yourselves in the void and disappear, and let new India arise in your place. Let her arise – out of the peasants’ cottage, grasping the plough; out of the huts of the fisherman. Let her spring from the grocer’s shop, from beside the oven of the fritter-seller. Let her emanate from the factory, from marts, and from markets. Let her emerge from groves and forests, from hills and mountains’’.
Following on the thoughts of Swamiji, the government has taken up programmes to direct the benefits of structural changes and good growth to reach farmers, poor and other vulnerable sections of society and to uplift the under-developed regions. The Budget somehow consolidated these gains and particularly focused on strengthening agriculture and rural economy, provision of good health care to economically less privileged, taking care of senior citizens, infrastructure creation and working with the states to provide more resources for improving the quality of education in the country.
The government has ensured that benefits would reach eligible beneficiaries and delivered to them directly. The Direct Benefit Transfer mechanism of India is the biggest such exercise in the world and is a global success story.
From food processing to fibre optics, roads to shipping, youth to senior citizen, rural India to Ayushmaan Bharat, Digital India to Start Up India, this budget strengthens hopes and aspirations of crores of Indians.
All in all the union budget 2018 is very pragmatic and has taken into consideration a large part of the population be it farmers, small corporate, senior citizens, etc. and would help in boosting growth, jobs, and private investment.
The writer is research head of AUM Capital