The long-awaited Budget arrives but garners lukewarm appreciation
The effort to boost a flagging economy got a bit of an impetus with Finance Minister Nirmala Sitharman’s second budget, but the markets were not very impressed.
The budget this year centred around three themes: Aspirational India to boost the standard of living; Economic development for all (The common man, the industry and the market); and building a caring and compassionate society.
“Our people should be gainfully employed, our businesses should be healthy; for all minorities, women and people from SCs and STs, this Budget aims to fulfil their aspirations,” said the union finance minister.
The country has been going through an economic slump and economic growth is at a multi-year low. Consecutive rate cuts five times by the Reserve Bank of India (RBI) along with a cut in corporate tax rates failed to revive consumption in the country’s economy. This budget, therefore, had a lot riding on it.
The highlight of the budget was the 70 exemptions from personal tax and a simplification of the process. The cut in tax rates for those opting out of exemptions also hopes to rake in more revenue. All this in a year where the economic survey indicated a 6 to 6.5 per cent growth rate.
The Finance Minister allocated Rs 9000 crore for the welfare of senior citizens. Along with that Rs 53,700 crore was set aside for the upliftment of Scheduled Tribes and Rs 85,000 crore for the welfare of Scheduled Caste and Other Backward Castes.
In the Health and Wellness sector, the budget allotted Rs 69,000 crore which included Rs 6,400crore for insurance under the Ayushman Bharat Yojna. The Finance Minister also said, “TB harega desh jeetega” while launching the campaign to eradicate Tuberculosis in India.
In the Power sector, India is to provide Rs 27,300 crore for promotion of Industry and Commerce. Firms operating with old thermal power plants are advised to shut plants if emission norms are not met. The budget also stated that the Centre would allocate Rs 4,400 crore for clean air incentives in cities with a population of more than one million. Ms. Sitharaman also announced Rs 20,000 crore for the renewable energy sector.
In the Transport section, Indian Railways is up for a big haul as the Centre announced four-station redevelopment projects and announced the development of solar panels in Indian Railways. Other than that 100 more airports are to be developed by 2024 under the ‘Udaan’ scheme.
To provide skill training to the youth of the country the Government proposed Rs 3000 crore for ‘Skill India Initiative’. “There is a huge demand for teachers, paramedical staff and caregivers in foreign countries. However, their skills do not match in accordance to demand by employers. So, my government proposes Rs 3,000 crore for skill development,” the Finance Minister said during the Budget presentation.
- The Government plans to continue its disinvestment plans by selling its stakes in Industrial Development Bank of India (IDBI) and Life Insurance Corporation (LIC).
The budget has received mixed reviews. “The Finance Minister has announced a balanced budget inspite of existing challenges in hand. It has focused on the generation of employment and inclusive growth through increased expenditure on the rural economy, infrastructure, MSME and healthcare. Abolition of DDT, tax relief to the middle class and lower-middle-class segments along with simplification of the tax regime will improve public sentiment and augur well for the economy,” said Kamlesh Rao, MD and CEO, Aditya Birla Sun Life Insurance in a news report.
However, the SENSEX didn’t agree and came down by 1000points. The market was largely expecting the Finance Minister to make some tweaks to long term capital gains tax(LTCG). But there was no such announcement. Investors were expecting for the abolishment of the tax.