Modi’s poll Budget sprinkles benefits all around

Goyal

In a typical election-year giveaway Budget, the Narendra Modi government tried to woo all sections of voters from farmers and tax payers to the unorganised sector with Finance Minister Piyush Goyal promising to implement most of the monetary benefits with retrospective effect from December 2018.

Only three months before the Lok Sabha elections, Goyal’s Budget gave an income tax benefit of Rs 18,500 crore to middle-class tax payers, the core BJP urban vote base, a move that stunned an Opposition that did not expect much from an interim Budget. Indeed, Goyal turned the exercise into a full Budget in all but name, a sharp break from tradition in an election year, the ethicality of which many questioned.

Through the biggest scheme for farmers in India’s history, which promised an assured income support to small and marginal farmers with direct transfer of Rs 6,000 per year in their bank accounts, the government tried to arrest the agrarian discontent mainly responsible for its defeat in three Hindi heartland states late last year.

The scheme will benefit 12.5 crore small and marginal farmers for which Rs 75,000 crore was set aside in the Budget for 2019-20.

Goyal also announced an assured monthly pension of Rs 3,000 per month, with contribution of Rs 100 per month for workers in the unorganised sector after 60 years of age.

The move came amid feedback from BJP grassroot workers that farmers’ discontent could singe the party’s poll prospects in the upcoming elections as the rival Congress has already made a pronounced pro-farmer pitch by announcing a loan waiver across the board.

The key announcements of the government came days after Congress president Rahul Gandhi assured a minimum income guarantee to poor.

The tax break to the middle-income tax payers, which is expected to benefit about three crore of them, came without a corresponding allocation of funds and took the political parties and economists of all hues by surprise.

Come April 1, individuals with gross income of up to Rs 9.75 lakh per year will not need to pay any tax if they make investments in provident fund, specified savings and insurance, NPS, housing loan and medical insurance.

Goyal also gave a Rs 10,000 increase in standard deduction for salaried class making it to Rs 50,000 from the next financial year.

This will provide an additional tax benefit of Rs 4,700 crore to more than three crore salary earners and pensioners, he said.

Similarly, the exemption on tax deducted at source on interest earned from banks, post office savings was raised to Rs 40,000 from the present Rs 10,000. The move is expected to benefit small depositors and non-working spouses.

“The kind of benefits and monetary allocation that the government has given through this Budget to farmers, unorganised sector and salaried class is historic,” said Goyal in his post Budget press conference.

The Budget also promised to give an interest subsidy of up to 5% to farmers engaged in animal husbandry and fisheries. The finance minister raised allocations under MNRGS to Rs 60,000 crore from 2019-20.

Goyal did not promise much on the jobs front despite coming under an all-round attack for highest joblessness in the past 45 years.

But, women, the caste-neutral constituency of the BJP, were addressed in many ways. The Budget set aside Rs 1,330 crore for the mission for protection and empowerment of women. This is an increase of Rs 174 crore on the revised estimates of last year. Women are the largest beneficiaries of Ujwalla Yojana under which the government is planning to deliver 8 crore free LPG connections.

The government set aside more money for caring of cows, an attempt to address the traditional Hindu constituency. A commission will be set up to enhance production and productivity of cows.

While the defence Budget was increased by only a little above 6%, enough only to take care of inflation, Goyal said, “This is the first time the defence allocation crossed Rs 3 lakh crore.”

The Opposition called the Budget a damp squib. Former Prime Minister Manmohan Singh called it an election Budget while senior Congress leader P Chidambaram slammed the practice of allocating money for schemes with a retrospective effect.