Experts and opposition parties will now sit down to analyse the budget documents to look at the fine print, particularly on the promises of tax breaks for the middle class. Finance Minister Piyush Goyal’s interim budget speech largely ignored the elephant in the room: the government’s poor record in creating jobs. He suggested that better growth delivered by the Modi government and investments in infrastructure “obviously” generated employment, but did not identify the number of jobs generated.
However, on the face of it, the interim budget has enough talking points to create an euphoria and galvanise Sangh Parivar workers for the election campaign.
The promise of a rebate in income tax rates, tax breaks for home loans could potentially help the Bharatiya Janata Party (BJP) retain its support base among a section of the urban middle classes.
The announcement of Rs 6,000 per annum assured income support to small and marginal farmers is an attempt to overcome the BJP's election defeat in three states last year--a setback attributed largely on farm distress. Opposition parties, however, would point out that the sum is a pittance, working out to be Rs 500 per month for a household of five members.
Significantly, the government has allocated Rs 20,000 crore to be disbursed this year under its PM KISAN, or PM Kisan Samman Nidhi, scheme, which could mean that the estimated 12 crore beneficiaries could get two installments of Rs 2,000 each by the time they queue up outside the polling booths to cast their votes in the Lok Sabha elections. Goyal has also announced increased allocation for protection of cows, but it is probably too late to assuage farmers facing stray cow and bull menace across northern Indian states.
However, there is little for the tillers, and unorganised sector. The sops for the real estate could help revive it. Time will tell if some green shoots will be visible before the Lok Sabha polls to offer daily wage work to millions of urban poor and landless agricultural labourers. The traders are also unhappy.
The big question is whether the budget would do enough to trigger circulation of money and increased consumption to help people forget the Modi government’s sins of a disastrous demonetisation and botched up GST roll out.