Towards New India
(Former Director, ICSSR, New Delhi)
“The Budget will play a great role in building a New “India” , assured the Prime Minister after its presentation in Parliament. He looks forward to making the nation samrudh (prosperous) and the people samarth ( empowered), fulfilling commitments made for 75th Independence day in 2022. Labelling it a “Green Budget”, Modi described it as citizen-friendly, development-friendly and future-oriented exercise which will empower the poor, provide better future for the youth and make citizens prosperous.
He is confident that with collective efforts of the nation, it is possible to grow as $5 trillion economy in the next 5 years. Asserting the target could be achieved if every family, tehsil and district move in the right direction. Critics who questioned this were dubbed “peshevar nirashawadi” (professional pessimists)
Importantly, the Budget is the instrument with which a Government can implement its policies and programmes for development, welfare and national security. Essentially, a document stating the Government’s income and expenditure proposal it has grown in importance and actually become a policy document.
In the context of the just concluded bitter electoral contest, this year’s Budget has extraordinary importance and will surely undergo strict threadbare scrutiny not only by Parties but also by people from different economic classes and social groups. Great expectations were raised during elections and greater will be the extent of criticism of the Budget which has to match aims and aspirations presented before the voters.
Few are inclined to look at the overall impact of the Budget while most critics focus on some specific aspects of special importance to them. An exercise like this has to address the needs and interests of all citizens and country directly and indirectly, openly and by implications and produce immediate and long-term effects.
The proof of the Budget is in its inclusiveness.
the first Budget of the second Modi Government has come out with substantial measures to usher in the Prime Minister’s “vision, passion and imagination” of a “New India”. Recall, the BJP Working Committee adopted a resolution in September 2018 to build a “New India” by 2022 which would be “free of terrorism, casteism, communalism and (where) nobody will be homeless”.
The professed aim of the Budget is to fulfil people’s aspirations in this term 2019-24 as their basic needs had been the focus in the first term 2014-19. This will be implemented through incremental measures building over the steps taken earlier. As Arun Jaitley described, it expands the road map on which the Prime Minister built India’s growth story from 2014-19. The proposals on the whole are for continuation of 2014-19 policy for holistic development.
Highlighting the central feature of the Budget, Modi stated the “poor will be strengthened and youth will get a better tomorrow. The middle class will progress and development will expedite even more. Tax structure will be simplified and infrastructure will modernize”. How these are to be achieved will prove the fiscal efficacy of the Government and its sincerity to redeem its pledges.
The Government has set an ambitious goal of achieving a sustained real GDP growth of 8% so as to take the nation towards a $5trillion economy by 2025. It hopes to reach 7% growth in the current financial year. This itself is a big challenge before the nation facing severe drought in most States and consequent drop in agricultural and allied activities. The key driver for economic growth is “investments”.
Top priority is given to infrastructure by allocations to build national highways, rural roads, faster trains, modern railway stations, expanded ports and develop aviation and inland waterways. Infrastructure gets priority as “growth engine” and advanced technology as its strategy.
Underscoring, larger investments and big firms are not job killers as propagated by some Parties, the Government’s Chief Economic Adviser cited China’s model of China where capital goods production, research and development and supply chains also generate jobs. Small firms are much larger in number than big firms in India, but they do not create as many jobs as the big firms and their productivity is also small.
However, in the Indian economy, small enterprises have their own significance in promoting self-employment and family occupations that are still thriving. To make them vibrant participants in building the economy, several loan schemes and assistance including easy procedures for starting and expanding enterprises are proposed.
Special attention is given to encourage growth of start-up industries. Only the identity of the investor and the source of income have to be provided. Funds raised by start- ups would not require any kind of scrutiny by Income Tax Department. Micro, Small, Medium Enterprises (MSMEs) will benefit from exemption of tax as well as scrutiny for investments up to 25 crores.
Lack of knowledge of economic matters and failure to look beyond our immediate surrounding are big handicaps of not just common people, Parties but also many leaders who do not want to come out of it for political reasons. Worse still, they come forward to lead protest movements against infrastructure projects while supporting at the same time, loan waiver schemes that may encourage beneficiaries to borrow further and make them indebted forever.
Agrarian distress is addressed with schemes to promote farming and not by writing off loans. Income-support scheme — PM Kisan Yojana —- for small and marginal farmers was announced in the interim Budget before elections. In accordance with the overall thrust on infrastructure, agriculture infrastructure will be promoted with dairy cooperatives and fisheries. Farmer welfare schemes like crop insurance, market intervention, price support , PM-Aasha procurement will receive emphasis. Rural housing will get priority.
The role of Non-Banking Finance Companies (NBFC) in the country’s economic growth is recognized and the sound ones among them will continue to receive funding from banks and mutual funds as they are considered important in capital formation in small and medium sector.
Social welfare continues to receive importance. This is reflected in facilities to self-help groups and increase in allocations to SC, ST and women. Housing and home building loans are furthered.
Higher tax on super-rich is likely to familiarize the nation with the concept of social responsibility of the well-to-do, accepted everywhere. But, whether it will reduce the burden on the middle class is doubtful unless price rise is controlled.
Throughout election campaigns, all Opposition Parties harped on the Government’s failure to create jobs, a criticism repeated against the Budget. Undeniably, jobs cannot be created like any material object but only facilities, favourable conditions, infrastructure and incentives can be provided which will generate work and occupations. Self-employment opportunities are growing and are preferred by job seekers in many fields. It cannot be ignored in the hunt after fixed salary, allowances and perks.
On the whole, the Budget conforms to the social-economic ideals of the Party in power. By voting for the BJP, the nation has accepted its income-expenditure proposals. INFA