The two most important events in our Democracy which directly affect the entire population of the country are Elections and the Budget. The Union Budget for 2019 has recently been announced and there are all talks around the subject across the nation. The Finance Minister, Nirmala Sitharaman has broadly looked upon quite a lot of segments and their development. And at the same time, has certainly missed quite a few.
In the last few years, there has already been a buzz around the possible imposition on the inheritance tax. But instead of walking the other side of the road, she decided to increase the levy on rich taxpayers.
In view of rising income levels, those in the ₹2-5 crores and ₹5 crores-and-above brackets will see an increase in effective tax rate by 3% and 7%, respectively. Rs. 5 lakh is the minimum limit announced for the taxpayers. Under the new tax regime, those with an income between Rs. 2 crores and Rs. 5 crores will pay tax at the rate of 39%, and those earning more than Rs. 5 crores will have to pay tax at a whopping 42.74%.
There are around 10,000 taxpayers in the Rs. 2 crores income brackets. Tax rates on incomes below Rs. 2 crores have been left unchanged.
In her speech, the Finance Minister said that that by 2022, on the 75th year of Independence, every single rural family will have electricity and clean cooking facility. Now a decision like this will surely bring wonders to all the minds because an area which is less taken care of needs more attention by the government and the budget makers.
She has also stressed upon the agricultural sector of the country. The agricultural sector, as she said will now rely upon zero-budget farming, which is a form of gardening as a self-sustainable practice, with minimal external intervention. But those who have waited for the most for the budget are the middle-class people and surprisingly, the budget has zero mention of the middle class of the country.
Not a single point in the budget talks about how the middle class should benefit from the list of ideas. Taking this into consideration, there have been a number of memes taking rounds of social media, talking about how slyly the middle-class was ruled out of the budget this time.
Middle class looking for some benefits in budget.
— Ashish Kulkarni (@Kulkarni1988) July 5, 2019
That said, this Budget was certainly not a non-event, as it carried several interesting proposals that are incremental in nature, consistent with Prime Minister Narendra Modi’s government’s reform agenda.
Sitharaman devoted significant time to explaining the schemes for the poor. These included a pension scheme for 3 crore retail traders, shopkeepers with an annual turnover of less than Rs 1.5 crore, time-bound programs to make electricity, drinking water and toilets available to rural households, a push on affordable housing, the expansion of social sector schemes to traders and farmers and tax sops to small companies.
The Budget also gave glimpses of intent to reform labor laws and PSUs privatization. This will not be easy as there are major challenges to implement this, primarily from the trade unions as we have seen in the past. To be sure, the government had attempted labor law reforms in the past too, but couldn’t progress. Similar promises have been made in the past too, which have largely remained on paper. The question is: Is it going to be different this time?
In her maiden budget, she is promising to keep the fiscal deficit at 3.3 percent of GDP, lower than the 3.4 percent projected in the interim Budget presented by Piyush Goyal. Also assuring that the fiscal deficit will come down to 3 percent in 2020-21 and will remain at that level in 2021-22 as well.
Till here she definitely deserves the applause to present a fiscally responsible budget, as needed. Though there are some worrying signs that make us doubt the deficit numbers this year. Money is being used for asset creation than day-to-day expenditure. One way of assessing the quality of the deficit is to look at how much of the fiscal deficit is accounted for by the revenue deficit. The challenges in meeting the needs provided in the budget are significant.
She also made several announcements catering to women. One woman in every self-help group will be made eligible for a loan of Rs. 1 lakh under the MUDRA scheme. She also proposed to expand the women self- help groups (SHGs) interest subvention program to all districts, and said, “For every verified woman SHG member, having a Jan Dhan Bank account, an overdraft of Rs. 5,000 will be allowed.” To pay tribute to the notable steps taken by her for women empowerment, Amul has posted a ‘Revolutionaari’ post on their social media.
— Amul.coop (@Amul_Coop) July 6, 2019
PAN and Aadhar have become interchangeable. We can now use Aadhar number to file the IT returns, which is a feasible and easy procedure for the citizens.
All in all, the budget does satisfy a few elements of the society and could have been a significant one, had it looked upon the other fragments too which required a lot of efforts by the Government. Though its highly doubtful if all the points noted in the budget will be fulfilled effectively. If she pulls it off, without the sleight of hand that finance ministers usually do, she will deserve more appreciation than that she is currently getting.