MUMBAI: Budget 2018-19 can be better dubbed as Finance Minister Arun Jaitley’s TINA moment. The phrase — There is no alternative — is associated with Margaret Thatcher who once said: “If there was another way, I would take it. But there is no alternative.”
For Jaitley and team, there were simply no excuses for a do-nothing budget amid rising rural distress, need for jobs, and an election year. The outcome is of manifold importance for both the NDA government and the nation, which prompted Jaitley to present an expansive expenditure budget of Rs 24.42 lakh crore.
He used no theatrical or poetic flourishes to deliver what was needed: giveaways for the rural and farming community. As for the urban middle class, this budget is nothing but a tasteless reheat of previous budgets.
Renewed thrust on agriculture and healthcare - which Jaitley categorically announced in Hindi for brevity - job creation, credit muscle and tax giveaways for MSMEs - a segment worst-hit due to demonetisation and GST - the Budget had them all. But while he was at it, the government’s captain of caution seemed to be fed up with years of cheese pairing citing fiscal rectitude. So deficit target of 3.2 per cent will be breached, rattling bond markets and rating agencies.
The biggest dole, as usual, went to agriculture with an earmarked Rs 14.34 lakh crore, including an institutional credit of Rs 11 lakh crore, which sounds like a mathematically calculated solution for farmers’ woes. The promised minimum support price of 1.5 times the production cost will offer farmers a profit margin of over 30 per cent, making doubling of agricultural income by 2022 realistic.
The proposed national health insurance programme for 50 crore beneficiaries, or 40 per cent of the country’s population, is arguably the world’s largest government-funded healthcare scheme. But Jaitley stopped short of explaining the fiscal math behind the move or the commitment towards the intent.
Listening to the mood music of MSMEs, he extended Rs 3 lakh crore credit via Mudra scheme, but avoided going near the obvious landmine called labour laws, which needs urgent reforms in order to spur job creation. Corporate tax is slashed to 25 per cent for firms with turnover below Rs 250 crore, but Jaitley remained spectacularly tin-eared towards large firms.
Personal taxes were left untouched and the Rs 40,000 standard deduction for salaried class turned out to be a pea-shooter, with the actual amount marginally higher than current deductions. Adding to the disappointment, cess was increased by 1 per cent taking the total to 4 per cent. As if this wasn’t enough, duties on about 45 imported items have been raised, so brace up to pay more for mobile phones, TV screens, sunglasses and perfumes.
The reintroduction of 10 per cent long-term capital gains tax could affect retail and institutional investors, while the EPF contribution reduced to 8 per cent for three years for women is just table stakes. The upshot is, senior citizens finally got their due, with increased exemptions under Section 80 D and others. Infrastructure, being the left ventricle of job creation and growth, needs Rs 50 lakh crore, but for now we have to make do with a mere Rs 6 lakh crore budgetary support and another Rs 1.48 lakh crore towards capex for railways.
Budget 2018-19 took a balanced approach with a bit more spending in priority areas, hoping the revenue-raising measures will be match-fit. More fireworks were expected, but Jaitley’s fifth and his last full budget, reinforced that a please-all budget is a rarity. Expecting it year-after-year is akin to expectation of seeing a super moon, blue moon and blood moon, all the time.