Despite demonetisation, common man should be happy with Union Budget
No finance minister has ever presented a Budget with so many global and local uncertainties.
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As expected, Opposition parties have duly slammed the Budget as directionless, confused and what not. They are entitled to their views, but amid all the harpings about the middle class, this Budget stands out by far.
If the Budget faces one criticism it is that this proposal is conservative at best. Some bolder steps could have been taken, but we should also consider that the finance minister probably presented this Budget in the most trying of circumstances.
No finance minister has ever presented a budget with so many global and local uncertainties, coupled with such sparse domestic economic data.No finance minister has ever presented a budget with so many global and local uncertainties. (Credit: PTI photo)
Demonetisation is the elephant in the room — we know almost nothing of its long-term effects, the short-term ones being none too flattering.
Finance ministers usually have the benefit of visibility of economic performance, including corporate balance sheets, at least until the end of December, and a tentative idea of how the last quarter is going to shape up. This time around, the advanced date robbed the FM of that visibility. Clubbing together the humungous Railway budget was another tough act.
A vast majority of the salaried middle class is in the Rs 5 lakh-6 lakh bracket and a five per cent income tax burden is a reasonable one.
Of course, one could argue that if businesses with turnover of Rs 2 crore could have been given a 6 per cent tax burden, surely the 5 lakh bracket could have been exempted.
Probably we are moving in that direction in the foreseeable future, but relaxation for smaller businesses is a must after demonetisation. India is a consumption-driven economy and most of the MSMEs would fall in this bracket.
To tide over the sluggish growth after the note ban this was imperative. Such a move is also aimed at creating jobs as consumption and demand increases.
Of all things, it took a finance minister from the BJP to allocate the highest amount for MGNREGA.
Remember, Rs 48,000 crore might still be barely enough, yet from Rs 34,699 crore in 2014-15 to Rs 38,500 crore in 2016-17, this is a major increase in allocation for a scheme that was not the most favoured one of the NDA dispensation.
The FM proposed the extension of affordable housing programme to five years. This would give infrastructure status to the sector. He also plans to lower the holding period for taxing capital gains on sale of immovable property to two years from three.
The finance minister allocated funds to bring more irrigation, roads, electricity and sanitation to villages. Farmers should get more access to credit too.
The move to boost rural and farm spending by almost 24 per cent shows the agrarian focus of the government and its flagship plan to double farm income over the five to seven years.
The slashing of undeclared donation to political parties from Rs 20,000 to Rs 2,000 is a bold move. It is highly doubtful that it would find any vocal supporters among our myriad political parties. They would find a way around probably, but it is a bold step.
Another bold step was banning cash transactions of over Rs 3 lakh. This is in line with the government's stated policy of eradicating black money and I suspect that this one, if properly implemented would turn out to be a better move than the currency ban one. This shows real intent of purpose.
The next logical move could have been the universal basic income (UBI). Maybe the FM was left with little resources to manoeuvre around this one and the polarising politics of our country would end up making a mockery of it, but the proposal is fine on paper.
But how you club subsidies and which segment you target would remain a stumbling block. States usually spend more on subsidies and they must be on the same page if the UBI is to become a reality. The wrecked PDS system may be a good point to start with.