Economic Highlights
New Delhi, 14 July 2014
Jaitley’s Budget
TOWARDS HAPPIER
TIMES?
By Shivaji Sarkar
The Prime Minister Modi Government unveiled it much-awaited
nascent Union Budget last week. All were agog whether it would inject the
much-needed boost to a stagnant economy. Find a solution by infusing massive
investment, creation of jobs and turning the economy around. Finance Minister
Arun Jaitley did not disappoint and took the plunge by zeroing in on the kitty
available which his predecessors were oblivious of to spur domestic investment
in the economy. By asking public sector undertakings, who sit over huge reserves,
to invest Rs 2.47 lakh crores.
Undeniably, the Finance Minister has tried to please too
many protagonists of River Ganga (Rs 2037 crore) to Hindutva icons like Shyama
Prasad Mukherjee, Deendayal Upadhyay and Sardar Patel as also the common
taxpayer. His overhaul left nothing untouched.
Indeed, Jaitley has gone out of the way to ensure that the BJP’s
pro-poor image does not get a beating especially against the backdrop of ensuing
Assembly elections in Maharashtra, Haryana,
Jharkhand and J&K. He has left subsidies untouched, maintained funds
for MNREGA, raises interest subvention on home loans, personal income tax
exemption limits and announced several social welfare schemes.
Goods used by the aam
aadmi like footwear, TVs, footwear, stainless steel utensils, computer
components, diamond and gems have become cheaper. The FM has also laid
additional stress on savings through revival of the National Savings Scheme of the
1960s and tax exemption for savings up to Rs 1.5 lakh.
Notably, Jaitley has tried to recreate the principle to ensure
the so-called Hindu rate of growth, a low but constant growth coupled with a
mix of development of the masses. By amalgamating domestic savings which used
to fund Government’s welfare programmes during the Socialist budgetary era of
Nehru with a new reforms programme, a suggestion harped on by BJP’s ideological
ally Swadeshi Jagran Manch for long.
Pertinently, the farm sector has got the Government’s attention.
It has projected a 4 per cent growth of agriculture through a technology-driven
second Green Revolution, an indication that possibly the farmers worse days are
over. They might no longer have to commit suicide as 13,000 did last year. The
Rs 500 crore price stabilization fund is aimed at mitigating the risk of price
volatility in agriculture produce.
Recall, two similar funds were set up by the erstwhile Vajpayee
Government which helped tea and coffee growers despite raising prices for
consumers. But Jaitley asserted this fund would keep a check on prices as well.
Simultaneously, Prime Minister Modi’s dream of following the Gujarat
pattern of soil testing system has been given the go by; instead an additional
Rs 56 crore was allocated to set up100 mobile soil testing labs.
Major change has been made to focus on MNREGA. Whereby, the scheme
has now been linked to the farm sector and rural asset creation. Given that farmers
had long been complaining that MNREGA had made labour expensive and unavailable
during the peak harvest and sowing seasons. This might help reduce corruption as
well, whereby only one family got 900 days of work!
A Rs 1000 crore irrigation scheme, agritech infrastructure
fund, national adaptation fund, development of indigenous cattle breed with an
initial allocation Rs 50 crore, Agricultural Universities in Andhra and
Rajasthan, Horticulture Universities in Telengana and Haryana; and farm
research institutes in Assam and Jharkhand are expected to give new direction
to the farm sector.
Similarly stress on organic farming in the North-East is
likely to change production patterns. Besides, Rs 8 lakh crore has been set
aside by NABARD and public sector banks for farm credit. A new TV channel would
be dedicated to disseminate information to farmers.
Importantly, Jaitley has shown some continuance in policies by
raising FDI limit from 26 per cent to 49 per cent in insurance, defence, and e-commerce
retail --- an indirect route for FDI in retail. Also, public-private
partnership (PPP) in shipping, inland navigation, airports and roads sector.
Nevertheless, it is to be seen whether domestic investments
through PSUs and other projects turns over the economy or leads to rise in FDI.
This mix is likely to ensure a check and balance. Jaitley’s FDI move might inspire
Indian corporates to invest their reserves in the country, instead of abroad.
This prescription, Jaitley hopes, would start a flurry of
activities and create jobs. Remember, the Economic Survey has been consistently
critical of the economy being in mess wherein no jobs were created. Despite 55
per cent growth, the service sector too did not create many jobs and remained
confined to 44 per cent.
Undoubtedly, the Government has little funds. Whatever
little was available was within limits set by the interim UPA budget in
February. However, the FM has managed small moneys, Rs 100 crore each for 29
schemes by re-engineering Chidambaram’s interim budget. This is a policy
change, which a Government interested in serving the people has done. Each of
29x100 programmes is somewhere part of the BJP manifesto and also aimed at
serving its political constituency.
Significantly, UP which added 71MPs to the BJP kitty has got
a bonanza. An AIIMS in to be set-up in
Purvanchal, eastern UP, Rs 50 crore has been earmarked for Varanasi and eastern
UP weavers renowned for exotic saris. The new textile cluster would help zardozi craftsmen in Bareilly
and chikan work in Lucknow.
The Buddhist tourism circuit would also benefit the State
from Kapilavastu, Sarnath (Varanasi), Sravasti
in east UP to Mathura
in the west which are associated with Lord Buddha. Besides, a metro for Lucknow has also been
announced. Bringing smiles to Union Ministers Rajnath Singh and Santosh Gangwar
as the benefit would be in their constituencies. UP has also set to gain from
the largesse to the power sector.
Further, programmes like the Rs 500 crore for displaced
Kashmiris (read Pandits) to return to their homeland, AIIMS in Maharashtra’s Vidarbaha,
West Bengal and Tamil Nadu are targeted to
keep new voters and possible allies happy.
The 100 proposed smart cities have been allotted Rs 7060
crore. This is aimed at creating new urban hubs and would be supplemented by the
Shyamaprasad Mukherjee Rurban
(rural-urban) project to be funded by the PPP mode.
Alas, poor bank depositors were hoping that Jaitley would
abolish tax deducted at source (TDS) from bank deposits which resulted in suffering
as many of them cannot fill the income tax declaration. Not only leading to Rs
1000-5000 losses in TDS but also making recovery a complicated and expensive
process. The Finance Minister still has time to make this small amendment and
free interest earning up to Rs 3 lakh from the scope of TDS.
Clearly, Jaitley’s budget despite the limitation of the
interim budget has tried to set a new direction for the economy as also ensuring
benefits to almost all sectors. If it goes as he wishes, the 2015 budget might clear
the path to revival of growth and development, thereby setting sail for happier
days! ---- INFA
(Copyright,
India News and Feature Alliance)
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