We live in a democracy and are proud of the power in our hands to elect our leaders. Every political party does its best to balance short-term gains with the long-term agenda they are committed to. Elections are round the corner and hence, the government has to do its best to strengthen the positive image and neutralize negatives in the minds of the electorate. Interim budget does that well!
Farmers, small businesses and new entrants to the talent pool constitute the majority in the electorate. The budget provides something or the other for each of these categories to build an environment of positivism.
Income Tax proposals favour a significant number of people in the salaried class and their families. They will have more money at their hands to spend. Economy will get the necessary boost due to increase in retail demand for consumer goods and services. This would have an indirect positive impact on consumer lending business. Jobs in sales, marketing and supply chain would get a mild boost as a result of this intervention. While this might sound populist, but we reckon this as a major positive in the budget.
Significant outlay of 75000 Crores has been given for the farmers to provide them income support of Rs. 6000 per year. The idea of UBI (universal basic income) has been doing the rounds for long. No Government has yet been able to implement the idea due to lack of funds. While this is an attempt in that direction, it is possibly too little and might not make a difference in their lives. We need agricultural economists and scientists to provide feasible solutions which will bring in transformational changes in farm productivity in the backdrop of declining landholding. Our budget needs to support those proposals, however the current budget scores well in creating the much-needed sense of optimism and boosting consumption. Let’s hope, this is the first step, the creative and transformative steps will come in the future budgets.
Boost for clean energy and electric vehicles has been along the expected lines. Similarly, infrastructure development and continued commitment to affordable housing, commitment to digital India and budget for railways are along expected lines.
The investments in railways, infrastructure anddefence would create new jobs. Similarly, income tax rebates to salaried class, doles to farmers and a few other rebates proposed in the budget will indirectly create jobs. However, these may not be adequate to accommodate the 12-13 million youth who are joining the labour force each year. We need a few more creative steps to reduce under-employment.
Fiscal deficit is bound to rise when you let go of some revenues due to rebates in taxation and increased spend in sectors like defence, animal husbandry, and provide benefits to farmers. Though the slippage is not alarmingly high, I am not sure if these measures are adequate to boost the economy to reach the goal of being a $10 trillion economy in 8 years.
On the whole, theinterim budget fulfils the immediate needs of a large section of our economy and paves the way for structural interventions in the forthcoming budgets.
The writer is Director and CEO, CIEL HR Services