This year’s Union budget what finance minister Arun Jaitley told is “budget for the poor”. Wednesday’s budget promised to help the poor. The finance minister pledged hikes in government spending and cut taxes as the PM Narendra Modi wanted to win back the sympathy of the people who were affected by his recent demonetisation.
Arun Jaitley promised to double the income of the poor in the next five years. He assured to bring 10 million families out of poverty by 2019. He promised more affordable housing for poor and halved the basic rate of income tax to 5%. The new budget also promised to cut taxes on small firms which make up 96% of India’s businesses.
The finance minister assured the lawmakers and the country that the slowdown of the economy caused by demonetisation would diminish soon.
India economist at Capital Economics in Singapore, Shilan Shah said, “It’s an election budget, to all intents and purposes, with a massive push on rural spending and some quite big tax cuts.”
The finance minister raised the target for the federal fiscal deficit to 3.2 percent of gross domestic product in 2017-2018. He estimated that the deficit will come at 3.5% this year.
The demonetisation move hit hardly to consumers, disrupted supply chains and hurt investment.
Jaitley increased capital investment by 25.4 percent and announced a 24 percent increase in rural and farm spending. Also, the health spending will rise by 28%. But there was no place to increase support for India’s troubled state banks. The finance minister said he would pump in 100 billion rupees in line with earlier plans.
He said India would close down the Foreign Investment Promotion Board to cut a layer of bureaucracy and make India a better place to do business.
Jaitley also announced strengthening of rules governing the funding of political parties. The maximum of cash donation is now 2,000 rupees and requiring parties to file income tax returns.
The budget will not only enhance the consumer spending but may also support the fortune of Modi’s nationalist party in five regional elections which will start on Saturday.
The budget was announced three days before the polling in Goa and Punjab. After the announcement of the budget, no opposition parties called it an election budget rather they criticised it was presenting no vision.
Congress leader and former union minister Anand Sharma said it was misleading and directionless. He claimed the Modi government had shifted it to avoid presenting the “ill-effects of demonetisation.”
He said, “I call this budget misleading because it is based on the data of just six months. The data from the third fiscal quarter, where the ill-effects of demonetisation will be visible, is not included in it…The budget and all the rosy figures the Finance Minister is showing, is based on data prior to November 8, when demonetisation was announced. The estimates and projections are thus wrong.”
The opposition parties alleged that the note ban punishing the poor instead of corrupt and it has been a disaster.
West Bengal CM and TMC chief Mamata Banerjee criticised it as clueless, baseless. She twitted, “Tax payers still have restrictions on withdrawals. Remove all restrictions immediately. And where are the figures for
A controversial #Budget2017 which is clueless, useless, baseless, missionless and actionless. Heartless 1/4
— Mamata Banerjee (@MamataOfficial) February 1, 2017
However, Arun Jaitley in his speech defended the demonetisation. He said the note ban would increase revenues by forcing people to declare untaxed wealth.
After Punjab and Goa, the next election stoppage is Uttar Pradesh followed by Uttarakhand and Manipur. Uttar Pradesh election is very crucial as it is the home to the highest share of rural people (155 million) and the half of them are directly employed in agriculture. The final result will be announced on March 11.