What finance minister Arun Jaitley 'forgot' to announce in his Budget 2018 speech
There was a lot of speculation about Union Budget 2018. Many observers were quite certain that since this was the last full Budget of the Modi government before the 2019 polls, it would be a “soft election Budget.” But that was not really possible as there was need to keep the fiscal deficit under control, along with the need for budgetary support to the rural sector. The benefits the middle class was hoping for also turned out to be illusory.
Unfortunately for the middle class there was a 4 per cent education and healthcare cess, along with higher custom duties on imported mobile phones such as iPhones etc. This was referred to as part of the “Make in India” programme. But the customs duties would only make costs higher, undercutting the government attempt to make viable and necessary goods for the domestic, and perhaps, if possible, goods for exports. Unfortunately, the “Make in India” policy has not been able to meet with the demands of the local and foreign market.
In a number of instances, finance minister Arun Jaitley didn’t even mention very important ongoing schemes and plans in his Budget speech. For example, the national rural employment guarantee scheme known as MGNREGS was not mentioned by finance minister Jaitley, though it is a major source of rural labour and the building of bunds, wells, etc.
The NDA government has claimed in the 2015-16 Budget speech by the finance minister that the outlay for MGNREGS of Rs 38,000 crore was a record. But the UPA 1, 2011 Budget allocation for the same was Rs 40,100 crore.
In 2016-17, MGNREGS had been allocated Rs 47,499 crore. In 2017-18, the Budget for MGNREGS was Rs 48,000 crore, once again claimed to be a “record.”
But just 1 per cent supplementary grants plus the Rs 47,500 crore would come to the same amount (Rs 47,500 plus Rs 500 crore supplementary grant). Apparently, the outlay this year was Rs 55,000 crore but was not mentioned by the finance minister in his Budget speech. Nor did this financial outlay include the pending liability of Rs 11,646 crore for wages to rural workers.
Various estimates have been made on the job losses in the informal sector because of demonetisation. Taken together with the GST, this has increased the fiscal deficit. The finance minister was unable to curb the fiscal deficit to 3.2 per cent of GDP, which has gone up to 3.5 per cent because of GST. Some relief the finance minister offered to the middle class by slashing basic excise cut of diesel and petrol by Rs 2. The government also cut additional excise duty on the fuels by Rs 6. The cuts, however, matched by by the introduction of a new road cess of Rs 8 per litre. So the prices of fuel basically remained unchanged.
Significantly, the share market was not positively influenced by the Budget. The BSE Sensex which was at 36,048.99 points fell to 35,906 points. Not a particularly good sign. Certainly better was expected in an election Budget. If other issues of benefits to farmers are added, these too have not been clearly voiced by finance minister in his Budget speech, nor is it clear how the required financial outlays will be available given the real state of the economy.