Budget 2018 was the last full budget before the next General Election as early as late 2018, there have been apprehension that Central Government would move away from the path of fiscal consolidation and would bring a budget which would be a populist in nature. To that extent both Finance Minister Arun Jaitley and Prime Minister Narendra Modi demonstrated that they have the vision for India which is separated from the compulsion of electoral calendar and compulsion.
Finance minister rolled out a budget designed to help distressed farmers and rural areas while boosting growth, jobs and private investment while maintaining the fiscal deficit target to be 3.3% of GDP.
The biggest beneficiary of this budget are the farmers who are the back bone of long term growth of Indian economy and tried to address the plight of distressed farmers. The proposal to raise minimum purchase price for corps would not only reduce the distress in the agrarian economy but also boost consumption demand in rural sector which help reviving overall economy and boost employment through the sector. The proposal to invest heavily in agricultural markets across India would deliver more money for rural areas, including irrigation projects and aquaculture projects,
The government’s new flagship National Health Protection Scheme, which aims to insure as much as 500 million people for up to 500,000 rupees a year of care would have massive long-term benefit of not only boosting private sector health care delivery but also would ensure that every Indian basis need of healthcare is covered.
Government’s move to double the allocation on the Digital India programme to Rs 3,073 crore — a decision that will help research and skilling in Robotics, Artificial Intelligence (AI) and Internet of Things (IoT), among others and this will create new skills and jobs and help usher in the next phase of the IT-BPM sector in India.
Government’s Focus to support MSME sector which is a large employment generator in the country is also a welcome move – both the reduction of corporate tax rate to 25% for SME below Rs. 250 crores turnover as well facilitating access to credit would not only help them to absorb the disruption of GST transition phase but also would help them to increase capacity from the enhanced earning and credit facilities.
While to certain section of Investors reintroduction of Long Term Capital Gain would be a disappointment however given the robust capital market and excellent capital return this is a bold move and would increase the tax collection to fund the government investment programs.
(The writer is former CEO, Religare)