An effective way to detect a Budget’s underlying message is by tracking moments during the Finance Minister’s (FM) speech when the Opposition’s murmur becomes an incessant wail. Today was no different.
In the end, the present government’s last Budget before Elections was what many had expected. But also, what many hadn’t.
Firstly, let us assess what came in-line. This wasn’t a Vote-on-Account; but a chronicle of achievements, a roadmap for the future envisaging the return of NDA, garnished with expected pre-poll Populism. Farmers were kept in mind second year running. Not through any structural measures (like MSP which, let’s face it, did not reap any brownie points for the government)…but rather a straightforward INR6,000 annual cash sop hitting bank accounts of all with less than 2 Hectares of land. Considering the first installment of INR2,000 may hit this financial year, the General Elections is clearly a factor.
Benefits around Fertilizers, Animal Husbandry, and Fisheries were again more “direct” in nature, in the form of higher subsidy allocations and a 2%-5% interest rate subvention for distressed Farmers. Contrast this to the ambitious broader vision which was sold twelve months back whose only remnant was a new Fisheries Department.
Commentators were on-the-money (including yours truly) in expecting the return of the Middle Class. The FM confirmed market rumours around a new threshold for tax-free income i.e. INR5L annually. Higher deductions around specified investments, benefits for Home-owners and Tenants, as well as TDS rationalizations only reinforced the Middle Class narrative.
Private Sector like last year, was forgotten again, barring minor respite for the Unorganized Sector in the form of a New Social Security Cover. Considering only INR500cr could be allocated for this year, that Scheme will for the moment operate in pilot mode. Whilst one cannot approve an almost continuous ignore of industrial reforms, at this stage in any case it would have been a case of too little and too late.
So what eluded expectations?
One can say that the government opted for sops but stopped short of defying logic, at least from a realpolitik standpoint. Fiscal Deficit breach stopped at 3.4% (vs. the initial target of 3.3%) and below the 3.5% market expectation for FY18-19. Aside from the INR20,000cr allocation for the Farmer cash inflow scheme, the remainder was a rather solemn affair. Loan write-offs and soft credit was thankfully avoided. Yes, SC/ST Welfare each received a near 30% plus envisaged increase in allocation, but for FY19-20, not the immediate present. One may term it as political grandstanding, but still not an offence worthy enough to express much fuss.
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