Arun Jaitley's Budget 2018 is politically wise and economically cautious

Considering the continuing agrarian distress and almost an all-round realisation that an immediate attention to revive our tottering rural economy could no longer be ignored, the Union Budget 2018 has done well to address the most important challenge facing India.

The shift definitely is also a response to the signals emanating from within the BJP, primarily after the Gujarat Assembly election results that have clearly suggested erosion of people's confidence, especially the rural population, in the ruling party.

The allocation of Rs 2000 crore for developing agricultural markets, another Rs 200 crore for cultivation and associated industry, Rs 10,000 crore for aquaculture infrastructure development besides the proposed state-of-the-art facilities in 42 mega food parks, and an allocation of Rs 1,290 crore for National Bamboo Mission, are welcome moves. The provision to support the governments of Delhi, Haryana and Punjab to curb air pollution through subsidised removal of crop residue is another acknowledgement  of a recent suggestion made in this regard.

Although this has come as quite expected, a budgetary provision to cover 100 million poor families (almost a 500 million headcount of our population) under the proposed National Health Protection Scheme of medical reimbursement plan of up to Rs 5 lakh for a family of five (a cover of Rs 1 lakh per person per year) with an assurance to extend the same further to more citizens under the Ayushman Bharat Scheme, comes as a positive humble beginning.

The coming times will bring more clarity on fair execution and implementation of these provisions as a lot of intricate detailing will need to be addressed by both the central and the state governments for the success of these schemes. There was also an expectation that the Budget would extend the Madhya Pradesh government’s Bhavantar Bhugtan Yojana - according to which the government pays farmers the difference between MSP and marketing prices - to all states. Hopefully, something more robust may be in the offing soon.

As expected, there has been no change in the personal income tax rates for the salaried class even though a marginal benefit has been extended to them - a standard deduction of Rs 40,000 against travel and medical expenses (to reduce paperwork) for all, which as per the finance minister, would entail a loss of Rs 8,000 crore in revenues in the new fiscal. The decision that companies with a turnover of up to Rs 250 crore will now have to pay 25 per cent as corporate tax is also on the expected lines.

The interest of senior citizens, however, does not seem to have been addressed holistically.

Although a number of benefits have been announced - such as the exemption limit on income from interest in bank and post office deposits for them has been raised five times to Rs 50,000 per year besides the option of investment of up to Rs 15 lakh at 8 per cent return under the Pradhan Mantri Matritva Vandana Yojana - things don't look too great for senior citizens who don't get pension or have any other regular income.

To alleviate their hardship, the government could have instead exempted all interest income up to Rs 5 lakh (in metro cities) and up to Rs 3 lakh in non-metro cities (averaging just a sustenance figure of Rs 40,000 per month in metros and Rs 25,000 in non-metros). 

One also hopes all senior citizens are kept out of the incremental cess under education and health as this additional levy will also offset any savings granted to them otherwise. The increase in deduction limit for medical expenditure for certain critical illness from Rs 60,000 (in case of senior citizens) and from Rs 80,000 (in case of very senior citizens) to Rs 1 lakh for all senior citizens, under Section 80DDB, will also remain unavailable as well as unattractive so long as there is no control on the high rates charged by the private insurance companies.

On the employment front, it looks doubtful if all the measures initiated would really create jobs for the qualified youths of the nation as investments in the larger corporate sector may show a sluggish growth with those created in the rural, agri or MUDRA-driven initiatives, including MSMEs/SMEs absorbing only the semi-skilled or unskilled workforce at their own pace.

Development of tourism destinations might, however, add to some jobs in the hospitality and aviation sectors.

Overall, finance minister Arun Jaitley has done a commendable job by addressing the woes of the rural sector on time and with a populist "health for all" message without giving away much in any other major sectors.

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