Jai Gramin, Jai Gram
Focus shifts to the struggling farmers and neglected rural India. Both praise and criticism by corporate, opposition damns
Finance Minister Arun Jaitley took one hour forty minutes for his Budget speech out of which he spent over an hour in unfolding proposals for farmers and rural countryside. Knowingly he was encroaching on what Congress believed was its territory, a monopoly over farmers, villagers and all that was considered rural. But it could also have been further incentive to give economy a new look and new direction. At the end of the financial year, when the performance of the government is assessed, the benchmark for it would be on how far Budget proposals could be implemented. Do our farmers, farms and villagers look brighter, cleaner and carefree?
Economists had been warning that his third Budget would be more challenging because he had to incur heavy expenses for Modi promises to be fulfilled but at the same time to keep deficit as low as possible. He did not have in third year, the luxury to point out all the hits and misses to his predecessors. He had done that during the first Budget which concentrated on control of damages caused by the policy paralysis and sleaze a month in the UPA-2. The Supreme Court cancelled allocations of coal mines and in telecom. The government needed to resolve these massive problems. It is in the second Budget that taxes on corporate were cut, prompting Rahul Gandhi to accuse Modi of presiding over a suit-boot ki Sarkar.
In this third budget, Jaitley had to go in for large spending so as to ensure that Modi’s promises are implemented and be seen so by the voter. Led by Rahul, most accused the government of non-performance, which had already damaged him personally and cost BJP heavy in trying to persuade voters not to leave. It must be conceded he succeeded in doing that– 3.5 per cent—remarkably well.
Jaitley’s stress on farmers and major expenditure on the rural countryside was motivated, apart from political reasons, by totally fragmented state of most economies and chill in the world markets, which impelled him to depend on the domestic market to keep productivity up. Although the state of Indian economy was robust, the growth 7.6 per cent, foreign exchange reserves touched the highest level of about 350 billion US dollar, the country considered bright spot amidst a slowing global economy by IMF, any further drop in world markets, Jaitley has allocated Rs 35,984 crore for agriculture and farmers’ welfare and Rs. 87,765 crore for rural development. This will focus on areas of drought and rural distress.
This will surely go a long way in removing stress of the farmer and the whole family. I had a farm and I used to see the anxiety on the faces of small farmers and their children, as young as five or six years old. They would look up to see if even there were some signs of cloud gathering. Or if it rained too much, many crops would be ruined or their yield would be drastically reduced.
The two other ambitious schemes Swachh Bharat Abhiyan, under which over 62 lakh toilets have been installed in 2015-2016 and electricity to all villages by 2018, will help (over 5800 electrified this year) improve the quality of life, health and literacy in villages. The young villagers benefit most from Modi’s Skill development scheme. Imagine the number of skilled task force available for the jobs that Make in India and Start UPs will require. Along with Smart Cities, these radical improvements in rural countryside will change the face of India.
These proposals, if properly implemented will go a long way to ‘Transform India’ to have a significant impact on economy and lives of people. Jaitley laid emphasis on focusing on ensuring macro-economic stability and prudent fiscal management. And once domestic demand continues with the pace of economic reforms and policy initiatives to change the lives of the people for the better, there will be focus on enhancing expenditure in priority areas of — farm and rural sector, social sector, infrastructure sector, employment generation and re-capitalisation of the banks.
The vulnerable sections will be taken care of through Pradhan Mantri Fasal Bima Yojana. A new health insurance scheme to protect against hospitalisation expenditure will be started. Under this Rs. one lakh insurance for cost of hospitalisation will be provided for every family. Over 3000 new pharmaceutical companies will be opened by the end of the financial year. The facility of cooking gas connection for BPL families in the name of the women in the household will be provided, for which Rs 20000 crore have been allocated. The government is committed to continue with the ongoing reform programme and ensure passage of the Goods and Service Tax bill and Insolvency and Bankruptcy law.
Over Rs 25000 crore have been earmarked for taking the important banking sector reforms and public listing of general insurance companies undertake significant changes in FDI policy. Gadkari gets boost of total investment in the road sector, Infrastructure including PMGSY allocation, would be 97,000 crore during 2016-17. India’s highest ever kilometres of new highways were awarded in 2015 and nearly 10,000 kms of National Highways in 2016-17. The allocation of 55,000 crore in the Budget for roads, apart from the additional 15,000 crore to be raised by NHAI through bonds, the total outlay for infrastructure is 2,21,246 crore. The stress will be on connecting villages.
Jaitley is on record saying that the inflation index would determine the nominal growth figure, and it is better to set modest targets and watch them. The nominal growth for 2015-16 (FY16) has been projected at 8.6 per cent. For the next year (FY17), the nominal growth projection is 11 per cent. In the current year, revenue growth has been about 17 per cent; for next year, it is projected at 11 per cent. The Budget also shows 10-per cent growth for revenue from service tax, after a 25 per cent rise this year. He said in an interview to a publication, “I would rather be conservative and improve. The current year (FY16) is an exception. With oil prices falling to $30-32, I was able to pass a part of the burden to the consumer, and a part we took on as cess, etc. This, we could spend on infrastructure.
Textile industry had very high hopes from this Budget, but it didn’t get any substantial preferences. For the promotion of Surat’s man-made fibre in the world and to make it saleable in China, we had expected a change in the Excise duty of 12.5 per cent on our polyester yarn and also efforts to promote employment in this sector was expected. Provision of providing loan to the textile sector on low interests should also have been there in the Budget.
Manoj Agrawal, President of Federation of Surat Textile Traders Association
The overall Budget seems good. But, it has ignored the textile industry in which some encouragement is necessary and also was expected by the industry. But, it has not been done. Forcing of anti-dumping duty on readymade garments, which is being imported from China, Bangladesh and many Asian countries, could have been done to protect the textile industry which is not done. The Income-Tax slab and rates kept unchanged. Some relaxation was expected but not materialized.
Jitendra Vakharia, President, South Gujarat Textile Processors Association
Gem & Jwellery sector is disappointed as there are no specific measures that have been announced to support this sector. Despite a number of representations made by various organisation related to gem & jewellery sector the Finance Minister has not considered any demand of this sector. The sector is already facing many challenges due to world economy slowdown, non-availability of finance, heavy import duty on gold and other issues. None of these concerns have been addressed in this Budget. We are apprehensive of the introduction of excise duty on jewellery products for the first time in several decades.
Dinesh Navadia, President, Surat Daimond Association
“If the growth is about 13 per cent, the rest came by way of additional revenue measures. Maybe that luxury will not be available in the next year (FY17), as you don’t know how much oil prices would go down. But, you have to have a fair assessment on that. Therefore, you assume you would collect as much as you did this year, plus a little more. I think for the next year, one of the reasons why the nominal growth has been of concern is that for 15 months, the wholesale price index (WPI) has been in the negative. When you average it with the consumer price index (CPI), your nominal growth comes to about 8.6 per cent, though your growth rate is seven or 7.5 per cent. During the United Progressive Alliance government, it appeared to be 12 to 14 per cent because of the inflation index, which is now very low. So, it all will depend on the inflation index. We have, therefore, taken a modest 11 per cent growth. If we are able to collect more, of course, we will be able to reach that target very comfortably.
“There are monumental income tax law changes that I have made. First, on the schemes: It’s not a Voluntary Disclosure of Income Scheme, it is not an amnesty. Inequality arises in an amnesty — you, as an honest tax payer, have paid 30 per cent, and I come as Johnny-come-lately and after 20 years, I say I am also paying 30. You, as an honest taxpayer, have ended up paying more. So, at current values, I have to pay 45 per cent. This is not amnesty as I am ending up paying one-and-a-half times more because of penalties for not having paid tax in time. This is intended to get some money from outside the system into the system. In the second scheme, if an appeal is pending in direct taxes, you pay, up to a certain point, the principal, the tax, plus the interest till the date of assessment. If it is a higher amount, in some cases, there will be 25 per cent penalty. And, you can sort your past tax problems out.
“There are similar schemes for customs, excise and service tax. If there is an issue of retrospective tax pending, there will be no interest and no penalty. Pay the principal amount. So I have tried to clean up the whole book. Then, as far as the ordinary tax payer is concerned, besides giving some advantages to small taxpayers, the most important aspect is the move in several cases to presumptive taxation. Small businesses, traders, shopkeepers, budget for an eight per cent, take the deductions, and pay the tax — and, no books are required. If you want to pay less then we’ll look at the books. All professionals, and there is a large amount of provisions in all professions, the presumption is 50 per cent presumptive tax.
“Actually, these categories will get a huge advantage of paying that, comply with the government and build up their capital. Between the service-class tax payer and this class — which is the bulk of our tax payers — it would be a simple one-page return and you wouldn’t have to see the tax office in your life… unless, of course, there is fraud involved… Now, I am not in a desperate situation in terms of my fiscal deficit that I must sell at rock-bottom prices. After all, this is public property. So, I stopped, and we will make about Rs 23,000-24,000 crore this year. In summing up one can say the Right has taken a Left turn. Not that it has pleased everyone. Even those who are pleased with many provisions do not say the Budget is spectacular. Rahul Bajaj complained there was not much for corporate. The Congress spokespersons said various critical things. No vision, opportunity lost, said one, another said there is no substance. I would add here that a little noticed item was that healthcare was mentioned as one of the nine pillars of the Budget, The provision that dialysis equipment will be imported without any duty is most humane thing to do.”
Jaitley would be pleased that most leaders in dailies had a good word for his Budget. HT said the Union Budget seeks to balance growth and equality with shift to asset creation and a direct assault on rural poverty. The general feeling is that the Budget has been prepared with an eye on Uttar Pradesh election next year. But I feel this vote-catcher Budget is prepared with an eye on 2019 General Election. The full impact of this Budget will be felt by the end of 2018.
Imagine then 58 million households who live in rural sector being a happy contented voter.
By Vijay Dutt