BUDGET INDIA 2018-19

Union Budget for the FY 2018-19 is out. The budget has tricked the common man again with rosy dreams and new lollipops as the promises made earlier could not be implemented so far. This has been Finance Minister Arun Jaitley’s 5th and last budget of his govt’s tenure. Now let’s see if the budget has been crafted after keeping April- May 2019 election in mind.

A budget makes a great economic statement of a country through its aim to boost industry, agriculture and rural economy, create employment opportunity, generate investment, demand and productivity, keep sufficient provision for education, health care and social protection.

EMPLOYMENT : The govt failed in her promise to generate one crore employment a year. Only paltry less than 3 lac employment was generated ever since it came to power in 2014. The govt seems to have realised that she failed in her promise because of lack of vision and realistic plan for job creation and prepare the economy of the country to meet the requirement. Therefore a new lollipop has again been offered of revised, over ambitious and non-realistic 70 lac numbers of jobs this year. People into selling pan, chai and pakora are not new. Such means of livelihood are not new that bloomed in the teneur of this govt only. They were in existence earlier too. So let the govt no more confuse the people.

INDUSTRY : Govt seems to have realised the failure and problem caused due to demonetization. To revive SMEs the proposal to reduce  corporate tax from 30% to 25% to entities having a turnover of up to Rs 250 crore from Rs 50 crore is welcome but not extending it to all corporates will put off investors and the market.

We have yet to see the actual package to give relief to MSME sector which bore the brunt of demonetisation and hurried implementation of the goods and services sector (GST). SSI and MSME units are the major job providers. Most of the units have either pulled down their shutters or are in pressing need of funds to restart their units. The easy loan benefits may take time to reach such units and as the term of the govt will be over to disburse the benefits before election in 2019. This illusion has been tactically created to confuse the so called beneficiaries.

A set back to the Stock Market as the investors are not happy due to re+introduction of Long Term Capital Gains tax on gains of more than Rs 1 lakh in the equity market at a rate of 10 per cent.

AGRICULTURE : Most miserable lots are our farmers. They are deep in debt due to non waiver of loans and non implementation of MSP. The govt did not keep her promise to offer them MSP -- 50% added to their production cost. As a result suicides after 2014 has risen by 42%. Now another illusion has been created in this  budget for giving the farmers 1.5 times of their production cost on Kharif crop. The same govt which went to court to convince the judge that it is not possible to implement their proposed MSP to farmers how can the govt be trusted now. Where is the time? How the production cost will be determined? The Budget is only talking about Kharif crop instead of about 10 crops of Rabi and Kharif combined. By the time election time will come and uniform civil code will be imposed. Farmers’ problem is expected to stay where it is. The illusion has been created to offer castle in the air to farmers who rejected BJP in the recent assembly election in Gujarat. Hence a deliberate confusion has been created.

SALARIED CLASS : The middle class which made the most of the sacrifice such as to bear the uneasiness to stand in queue for days and month for exchanging currency notes due to demonetization, sacrificed their gas subsidies etc received no benefits in the income tax rates. The reintroduction of standard deduction after many years of Rs.40,000 a year may not really enthuse tax payers as this will be in lieu of the existing transport allowance and medical expense reimbursement. However, other medical reimbursements in case of hospitalisation will continue.

The govt increased the education cess to 4% from 3% to help cover the costs of government-sponsored programmes in health and education.

OLD & SENIOR CITIZEN : Budget 2018 has been kinder to senior citizens, in order to allow them a "dignified life".  To begin with, tax exemption of interest income from bank deposits has been raised to Rs 50,000 from the current Rs 10,000.

HEALTH CARE : Government funded health care programme titled National Health Protection Scheme proposed to cover over 10 crore poor and vulnerable families (approximately 50 crore beneficiaries) providing coverage upto 5 lakh rupees per family per year for secondary and tertiary care hospitalization. A sheer illusion as it is not clear of

I) sourcing the fund

ii) identification of beneficiaries.

Hence another lollipop.

Be it known that there has been 12% increase in oil prices and as per IMF another 11 % hike is expected in international oil prices. So the rise in petrol prices is a great challenge to our economy. GDP growth is most likely to remain below 7%. On the other hand to keep fiscal deficit (expenses more than income) at 3.2% of the GDP shall also be hard to maintain. This govt could achieve the reduction in fiscal deficit earlier due to steep fall in oil prices in the international market and thereby reduction in import and balance of payment (i.e current account deficit - Import bill more than export earning). Hence that time import bill was less than usual because of fall in oil prices. Therefore reduction in current account deficit was not achieved due govt's economic plan. But now oil price is rising. A well plan out fiscal discipline is required to control govt expenditure and effective fiscal management.

Hence a seemingly attempt has been made in the proposed budget to mislead the common man by announcing gifts and bounties which otherwise may not be possible once moral code of conduct is clamped before election.