The first budget of the Modi Government’s second term was presented by India’s first full-time women Finance Minister Hon. Mrs. Nirmala Sitharaman. The first budget of the second term doesn’t seem to have met the expectation of people at large. The budget presented was more a statement of intent of the government on the futuristic vision of the government in building the country’s
infrastructure, agriculture sector while benefitting the lower and middle-income class people.
However, the budget somehow lacked in providing concrete numbers on these fronts. On the major problems of the economy, the country is plagued with the issue of - 1) the looming drought-like situation and 2) the rising unemployment among the youth. The budget did not really provide any concrete and immediate relief on these fronts.
On what was provided in the budget, the finance minister proposed working with the states to benefit the farming community from the National Agriculture Market (NAM) and also mentioned farmers moving back to basics with zero budget farming. While these initiatives are undoubtedly good for the long-term, it missed on providing any concrete solution to address farmer's current
situation, particularly the credit burden.
The finance minister also talked about skilling program for the youth in the areas of Artificial Intelligence, Big Data, Robotics, Internet of Things, etc. She also announced a series of benefits to entrepreneurs and start-ups and mentioned starting a dedicated TV channel for start-ups. These moves, I believe, would be beneficial over the medium to long term for the economy.
The focus and intent of the government on building infrastructure – Roads, Rural housing, affordable urban housing, Electricity, Water, Metro rails, Railways came out clearly in the budget. Also, the focus on the environment was seen well whereby the minister announced providing tax benefits of upto Rs 2.5 Lakhs on the purchase of Electric Vehicles.
On the taxation front, the middle class got some benefits. An additional Rs 1.5 lakh deduction on interest payment for houses, up to Rs 45 lakhs, bought during the financial year. Also, a pension scheme for three crore shopkeepers with turnover below Rs 1.5 Cr was announced, which would ease their living. But the sop for the class came at a cost to the rich and super-rich. The minister announced levying more tax from the rich in the form of additional surcharge of 3% for income above Rs 2 Cr to 5 Cr and 7% above 5 Cr.
On the corporate tax front, no significant changes were announced except for the fact that 25% tax rate is now extended to companies having a turnover of Rs 400 crore from the current Rs 250 crore threshold. However, a 2% TDS is introduced on cash withdrawal, more than Rs 1 cr in a year, from a bank by companies. The move is aimed at reducing cash transactions, which falls in the broader objective of reducing parallel economy. Lastly, the excise duty on fuel has been raised by Re 1, which is going to cost a share in everyone's pocket.
Lastly, I believe the government's action on all of its stated intent would be its litmus test in the days