Right strikes Left chord
Just in case the Finance Minister’s nearly two-hour speech did not carry the point deep enough that it was a pro-poor Budget, Prime Minister Narendra Modi in a televised detailed reaction said, “The Budget has focused on development of agriculture, farmers, women and rural areas.”
To give Modi government a pro-farmer image, the Budget has sought to even resuscitate UPA’s MGNREGA programme. “At least 5 lakh farm ponds and dug wells in rain fed areas and 10 lakh compost pits for production of organic manure will be taken up by making productive use of the allocations under MGNREGA,” the Finance Minister announced.
Learning lessons from recent political setbacks, the Budget clearly indicated that the BJP did not want to go to polls in several states in the coming months with a pro-rich tag. The Budget sought to double a farmer’s income by 2022.
However, it’s not a Jai Kisan Budget either. To use words of NITI Aayog vice-chairperson Arvind Panagariya, “It’s a well rounded Budget addressing all sections of the society.” A similar view was also expressed by the government’s virulent critic, senior BJP leader Yashwant Sinha, who said, “I have no doubts that when people see and understand the Budget then they will discover that there is something for everyone in all aspects.”
However, despite the admiration, the Budget failed to lift the market. After a volatile session through the day, the Sensex finally settled 152 points in the red.
Jaitley’s third successive Budget, which listed nine thrust areas of tax proposals to transform India, brings relief to small tax payers, pushes public spending in core areas to boost growth and employment, gives incentives to domestic value addition for Make in India, moves towards a pensioned society, affordable housing, resource mobilisation for agriculture, rural economy and clean environment, reducing litigation in taxation, its simplification and use of technology for creating accountability.
This was the first time that the government invited suggestions from citizens through Twitter, even conducting a series of polls to gauge public priorities and expectations from the Budget. The script in the end did indicate that several of the suggestions may have been accommodated in the pro-poor script of the address.
The Budget also sought to acknowledge the good performance by four core area ministries – Power, Roads, Railways and Rural Development. The Finance Minister loosened the purse strings quite a bit while making allocations for these ministries.
Between Roads and Railways, an allocation of Rs 218000 crore will be made during the fiscal, said Jaitley during the address, which for the larger part he read sitting on his seat. The focus in these sectors too would also be on rural roads and rural electrification.
However, the success of projects in rural areas especially those related to agriculture would be
dependent on the equations between Centre and the particular state. “Amendments to the APMC Acts of the States are a pre-requisite to join this e-platform,” the Minister said indicating how the benefits could accrue to the states.
In the rush to dub the Budget pro-poor and pro-rural, which includes subsidized LPG connection to poor and health protection scheme, it cannot be concluded that Jaitley ignored the urban middle-class, BJP’s most loyal voters.
While income tax slabs may not have been altered, the Finance Minister has tried to make benefits reach this segment through other means like – providing relief to small tax payers by proposing to raise the ceiling of tax rebate under section 87A from Rs 2000 to Rs 5000 for income not exceeding Rs five lakh. This would benefit two crore tax payers.
Additional deduction for those who do not own any house or get any house rent allowance was raised from Rs 24000 per annum to Rs 36000 per annum. The Finance Minister has extended presumptive taxation to professionals with gross receipts upto Rs 50 lakh.
Jaitley was under pressure to deliver a Budget targeting growth, he has done that but at the same time tried to maintain fiscal discipline. In doing the balancing act his Budget in the end is as much about ease of doing business as ease of paying taxes.
4-month Compliance Window for domestic black money holders; tax, interest on them at 45%
Relief for tax payers who earn below Rs 5 lakh; ceiling of rebate u/s 87A raised to
Rs 5,000 from Rs 2,000
House rent deduction raised from Rs 20,000 to Rs 60,000
One-time dispute resolution scheme for retro tax cases, penalty, interest waived
High level committee headed by Revenue Secretary to oversee creation of fresh liability using retro tax law
Corporate Tax for new manufacturing units fixed at 25%
Clean energy cess increased from Rs 200/ton to 400/ton on coal, lignite and peat
First home buyers to get addl deduction of Rs 50,000 on interest for loan up to Rs 35 lakh; cost of house should not be more than Rs 50 lakh
To achieve fiscal deficit of 3% of GDP by (2017-18)
Fiscal Deficit target 3.9% in 2015-16, 3.5% in 2016-17
Budget lists 9 transformative pillars including doubling farm income by 2022, infrastructure, investment, reforms
Highest ever allocation of Rs 38,500 cr for MGNREGA
Start-ups to get 100% tax exemption for 3 years except MAT which will apply from April 2016-19
To give statutory status to Aadhaar programme