Piyush Goyal Missed a Chance to be Generous In the Interim Budget – Why Voters Might Not Be Impressed
Overall, minus the filmy swagger, poetry and hype, the budget speech was along expected lines.
The Interim Budget 2019 was one the government was not meant to present.
They were supposed to give a simple statement of accounts and ask the Parliament for permission to make regular payments like salaries. However, we had an erstwhile treasurer of the Bharatiya Janata Party (BJP)and an old Rashtriya Swayamsevak Sangh (RSS) — member-Piyush Goyl- give not only a full-fledged budget but also a very long speech.
In his speech, Goyal underlined how the cow was most important and how his government has done everything for the cow.
Goyal underlined how the cow was most important and how his government has done everything for the cow. He talked about how wonderful a film Uri: The Surgical Strike (another nationalist war movie that underlines the BJP agenda) was. There was no mention of minorities except for a sharp 30 percent increase in allocation to the Scheduled Castes and Scheduled Tribes budget — Dalits have been angry at how the upper caste emboldened by Hindutva had wreaked havoc on their economy and security.
The atmosphere in Lok Sabha was rather crass. Members of Parliament chanted “Modi, Modi, Modi,” and the Prime Minister did not bat an eyelid. The finance minister talked about films. It was quite surprising to see Piyush Goyal announcing a single window clearance mechanism for Indian filmmakers that was earlier available only for foreigners. He also announced that anti-cam-cording provision would be introduced in the Cinematography Act. He then talked about how his government has reduced GST on cinema hall tickets and ended with talk of extraterrestrial travels and a resolve to send some Indians into space. Clearly, the recent bonhomie between the Prime minister and Bollywood hotshots was evident in the budget speech, like never before.
However, the major point that I would make about this budget is that this a budget for the core constituency, the middle class. The exemption for Tax Deducted at Source (TDS) for rental income below 2.4 lakhs a year, and on Rs 40,000 on interest earned on deposits, the two houses instead of one for offsetting long-term capital gains and the rebate to those making less than five lakhs are all steps that would leave the middle class happier. The beauty of this move is that it does not even impact revenues in a big way as the total is a meagre amount. Back of the envelope calculations would suggest that the total revenue loss because of these simple steps would not exceed Rs 10,000 crores.
So, the budget is a middle-class dream. It also leaves the corporate sector happy. The middle class now has a little more money that it can spend, and so the dormant consumption that the economy has seen over the last three years should improve, even if slightly. The big relief to the industry is that there is no new cess and no new tax. With the dominant civil society narrative pointing at rising inequalities like never before, there was a danger that the finance minister would succumb to the temptation if gaining points by striking against the suited-booted. However, this did not happen, and the corporate sector must be delighted. In light of the concessions given to the middle class, an automatic corollary would have been a corresponding increase in taxes for the super-rich. Now we must wait to figure out where the revenue replenishment will come from.
So, the budget is a middle-class dream. It also leaves the corporate sector happy.
The Prime Minister himself had been stressing on the health sector and Modicare. Despite such high-level talk and in spite of the large scale criticism of poor allocations to such an ambitious project, there was nothing to report. This is what was intriguing about this budget speech — what it did not talk about.
There was no mention of increases in allocation to health. The finance minister patted the Ayushman Bharat scheme on its back and gave figures of the various AIIMS being built. He also increased the honorarium to (Accredited Social Health Activist) ASHAs and Anganwadi workers, fulfilling a promise made by the PM last September. The FM also announced that the Jan Aushadhi scheme had been working to provide inexpensive drugs to patients. A meagre sum of little more than Rs 27,000 crores was declared for the Integrated Child Development Services (ICDS). And that was all, as far as the health sector was concerned.
Has Modiji given up on Ayushman, like he seems to have on land acquisition, labour law reform and Article 370?
In an election year, much more was expected. Ayushman — or Modicare, as the party worker insists it be called — was touted as a game-changer that would bring health access to the forefront. Prime Minister Narendra Modi had put his weight behind the scheme. A special agency was launched, and there was a flurry of activity. The budget speech said a million patients had been treated under Aayushman already. That’s it. Nothing more on what was the impact, on why the scheme would alter the health landscape and how it would be scaled up. Has Modiji given up on Ayushman, like he seems to have on land acquisition, labour law reform and Article 370?
Overall, minus the filmy swagger, poetry and hype, the budget speech was along expected lines. The interesting announcements were on digital villages, on solar power and urban infrastructure in villages. Why the minister did not go the whole hog in wooing a recalcitrant farmer is a mystery. There is a two percent interest rate rebate plus three percent for well-behaved borrowers, but this would only impact an insignificant ten percent that borrows from banks. Why is the dole restricted to a mere Rs 500 a month for a farming household and why only for those who have less than two acres of land? What will this do to help farm distress? The guarantee of a reasonable income for all farming household would have been a game changer given the politics around Universal Basic Income (UBI). Piyush Goyal, however, missed a chance to be generous and that is why the voter might not be impressed.
Dr Amir Ullah Khan is an Indian economist. He is a Professor at the MCRHRDI of the Government of Telangana.
Also read: The Alchemy of Vote of Account Budget 2019