Budget will have incentives for job creating sectors, farm, infra

With joblessness worrying Prime Minister Narendra Modi in an election-bound year, the government is all set come up with a lot of incentives for employment generating sectors in the budget to be presented next week.

Focus will also be there on increased allocation to schemes that help generate self employment such as Pradhan Mantri Mudra Yojana and Stand Up India.

Although the Prime Minister has debunked the jobless economic growth theory ahead of his Davos visit for the World Economic Forum, sources said that unemployment is a major concern this time around, as the government does not have much time left before the 2019 parliamentary elections.

Adding to the government concerns, an International Labour Organisation report this week has said that a lot of the jobs being created are of poor quality despite strong economic growth, adding that at least 77% of workers in India will have vulnerable employment by 2019.

The report said that of the 535 million labour force in India in 2019, some 398.6 million will have poor quality jobs.

The government is planning to lay down a roadmap on tax breaks to industries that commit a certain number of job creation in a given year.

Even if the Prime Minister has hinted towards the Budget being non-populist, it may contain some some surprises on the direct taxes side to give some relief to the middle income group and salaried class.

Besides, central government schemes will see about 10% increase in allocation, a source said adding even Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) scheme will have an equal increase. Last year, the government had allocated Rs 48,000 crore to the scheme.

With an aim to doubling farmers' income by 2022, the government is expected to announce a significant hike in farm sector budget with a special emphasis on landless cultivators who are often devoid of official benefits handed out to the peasant community.

This year the budget document will also be shorter with Part B that includes tax proposals being less voluminous after about a dozen of indirect taxes and cesses being merged in GST. Similarly, the Finance Ministers speech is also expected to be crisp one in absence of indirect tax concessions being removed from the budget portion.

The part B will now be confined only to direct tax proposals plus any changes in rules in GST, any new policy announcements regarding taxation matters and new schemes.

For the middle income group, hit by demonetisation and GST, Finance Minister Arun Jaitley is expected to give more avenues for tax savings in this budget with either raising the exemption limit or tweaking the tax slabs.

With all these measures, the budget size this year is expected to be bigger by at least Rs one lakh crore over last year's Rs 21.47 lakh crore Budget.