Much will depend on implementation
Will the Budget 2018-19 be able to help Prime Minister Narendra Modi get another term at the Centre. Well, it can. Yet, how easy or hard it will be? Unlike previous governments, the latest budget has shunned populism, which, though wise, is not always appreciated by a section of the population.
The budget is more focused on consolidation of reforms already initiated while opening its purse strings for the social and rural sector to create jobs, provide government-funded health care to 50 crore people (25 crore in the first year, i.e., 2018-19) and address rural infrastructure gaps. These are positive structural reforms.
Despite weak finances, the Budget saw a further increase in overall expenditure, with the biggest allocation going to transport, rural development, agriculture, education, and healthcare.
The transport sector will see a 25.6% annual increase in allocation to Rs 1.34 lakh crore, which will mainly be channelised towards the road and rail sectors. The railway network expansion plan will span 18,000km, and will include the electrification of railways and upgrading the safety and security of major railway stations. Additionally, rural development expenditure will remain high at Rs 1.38 lakh crore for improving rural roads, providing housing, electrical connections, and sanitisation. Agriculture spending will see a 12.8% increase to Rs 63,800 crore with a focus on increasing farmer incomes, improving farm efficiency, and ensuring better crop price realisation. The announcement regarding fixed term employment and measures proposed to incentivise employment of women are much needed serious measures. Other than promoting long-term economic growth, these initiatives are also likely efforts by the government to win voter support among the large rural and farmer communities ahead of key state elections in 2018 and the Lok Sabha elections by May 2019. The government also extended the lower 25% corporate tax rate to Micro, Small, Medium Enterprises with an annual turnover of up to Rs 250 crore. The move is positive for business activity given that almost 99% of tax filing companies in India will now be included.
All in all, the statement that creation of jobs and facilitating generation of employment being at the core of government’s policy making is supported by the announcements made in the Budget.
However well-intentioned, if the plans are not properly implemented on the ground, it won’t give the desired outcome. For example, expansion of health insurance also conduces to a more healthy, productive and secure workforce. But, the ambitious, fully government-funded National Health Protection Scheme won’t be rolled out till October as the scheme is yet to be designed in consultations with states, who will bear 40% of the annual Rs 10,000 crore cost.
Similarly, reforms in agricultural markets, connecting habitats to agri-markets and well conceived plan for creating more irrigation facilities are some of the initiatives which can enable agriculture to realise its potential.
Salaried class may be a little disappointed with the Budget as it doesn’t contain much for them, at least directly. However, if the policies are implemented well and businesses flourish, they are the ones who will benefit the most. It is time for us as a society to look at the big picture.