It is actually a Budget for ‘Bharat’ with a good stance over the agricultural and rural economy of India – which is the overall growth story for the agro-centric country. Two of the three people in India live in villages so their income is critical, from both economic as well as electoral aspects.
The Budget 2018 has quite a lot of appreciable and noteworthy proposals planned out for the nation, but beyond that, it is still unavoidable to notice that the fifth and last budget for NDA government’s final term is the one focusing voters. Farmers, informal sector workers, small businesses, senior citizens and the poor in general, all stand to benefit from the Budget while the middle-class tax payer, markets and corporates have been hung out to dry. This is good, because that sector needed most of it and the budget actually focuses on “consolidation and agriculture, infrastructure and healthcare”. The healthcare covered under Budget 2018 proposes universal health cover of Rs 5 lakh per annum that will benefit 50 crore people. Excellent, because it will aid those who cannot afford quality medical treatments.
The budget this year was actually expected to be agro-focused, as the rift among rural voters of India was clearly visible in recent assembly elections, especially in Gujarat. So Mr Jaitley has made a slew of farm-focused announcements, raising the minimum support price to 1.5 times the production cost for Kharif crops, a key demand of distressed farmers. He also announced what is arguably the world’s largest government-funded healthcare scheme and free gas connection for 80 million poor families. The tax concessions extended towards senior citizens is also great because most senior citizens are living off interest income so the increase in taxable limit for interest earnings to Rs 50,000 is welcome indeed. The proposal to extend the 25 per cent corporate tax rate to MSMEs with turnover upto Rs 250 crore (earlier Rs 50 crore) who are in dire need of support is a good one because they are the ones who bring jobs to unemployed, not the big corporates. The promise to revamp online loan sanctioning facility for MSMEs is encouraging too.
All this is great and fine, but the omission of anything substantial for the middle class was surprising. The standard deduction of Rs 40,000 (from around Rs 34,000 now) allowed for transport, medical reimbursement for salaried tax payers can at best be termed a token gesture. The 10 per cent tax on mutual fund dividends at the hands of the investor will hit the middle class. And, the big boys will be disappointed because they expected that he 25 per cent corporate tax rate will be extended to them – but it was rather stopped at Rs 2.5 billion. Also, for some strange reasons, equity gets favourable tax treatment compared to other assets. For example, profits on real estate transactions for property owned for less than two years are added to the sellers’ annual income and charged at whatever income tax rate is applicable. All in all, we cannot really complain about the budget and it is fairly fair – but there are only two concerns. First, it looks like an expenditure budget, so where will all the monkey come from? Second, is that it really is the one for the voters.