NEW DELHI: Results of the just-concluded Assembly elections are set to have an influence on the upcoming budget as the government is turning its focus back to rural distress and disenchanted small traders, in a bid woo them back with financial packages and Universal Basic Income (UBI).
“The election results will have its bearing on the budget. The focus of the upcoming budget is likely to be on rural sector, small traders and MSMEs and on creating a social security net for the poor. Consultations are on for a UBI scheme,” a senior Finance Ministry official told TMS.
Rural distress, which is being cited as one of reasons for BJP’s ouster from three states in the recently concluded Assembly polls, has forced the party to reconsider its financial priorities.
Last week, TMS had reported on the government planning a Rs 40,000 crore package to support the agriculture sector in the upcoming budget. Sources said the package will not necessarily mean a loan waiver, and that PMO is discussing it with the Finance Ministry and NITI Aayog.
Another major area, which is likely to get its fair share of attention, is small traders.
“We have already announced some measures for the MSME sector and the government is working on a major relief package for them,” said another official from the Finance Ministry.
The MSME sector roughly employs 11 crore people and contributes around 32 per cent to the economy. However, the sector was badly hit by demonetisation and GST.
According to an All India Trade Union Congress survey conducted in July, one-fifth of India’s 6.3 crore small businesses had seen a 20 per cent fall in profits since the GST rollout and the sector was growing disenchanted with the BJP government.
“It’s not just farmers. There was growing anger in trader communities, mainly the small traders. The Congress was able to tap their anger to a great extend,” said a BJP leader from Rajasthan.
Sensing the growing unease, Congress chief Rahul Gandhi, in his multiple political rallies, had attacked the government for “siding with big corporates and ignoring small businesses”.
In August, Gandhi went ahead and promised to shift focus of the country’s economic policy towards small and medium-sized firms, if his party comes to power in 2019. This largely worked in Congress’ favour.
