oppn parties Union Budget: Neither Here, Nor There

News Snippets

  • Supreme Court asks journalists to be responsible and publish only the official version of news after it was brought to its notice that migrant exodus started after the 'fake' news that the lockdown will be extended to three months
  • Small saving rates slashed by the government by 140 basis points
  • The Centre says that the exodus of the migrants was stopped to save villages and prevent community transmission
  • The Centre says March 31 will remain the closing date for FY 2019-2020 and no change will be made for Covid-19 disruption
  • Tablighi Jamaat fiasco puts several states on high alert, attendees and their contacts being traced
  • Stock markets recover on the last day of the financial year, but the sentiment remains weak
  • The government says Covid-19 is still in local transmission stage in India
  • Government scotches rumours of extending the lockdown beyond April14. Says no such plan
  • Centre asks states to give shelter and food to migrant workers to stop them from taking to the streets
  • RBI cuts repo rate by 75 bps, the steepest in 10 years
  • Centre writes to states regarding laxity in monitoring people who had arrived from abroad between January and March
  • Kerala reports a spurt in new cases
  • With 124 fresh cases on Friday, the number of reported cases in India stand at 854
  • Five of a family, including a 9-month-old-baby test positive for Covid-19 in Nadia district in West Bengal on Friday
  • The Pakistani army is reportedly forcibly moving all Covid-19 patients to PoK and Gilgit
Total count crosses 1600 in India with 52 deaths and 146 recoveries on Tuesday, spurt in cases in Maharashtra and Tamil Nadu
oppn parties
Union Budget: Neither Here, Nor There

By Sunil Garodia
First publised on 2018-02-02 19:56:37

About the Author

Sunil Garodia Editor-in-Chief of indiacommentary.com. Current Affairs analyst and political commentator. Writes for a number of publications.
As expected, the union Budget this year was a political statement but a bad one. The BJP forgot that the middle class has always been its staunchest supporter. Yet, the budget completely ignored it. Apart from that, the government has failed to spell out how it is going to finance the grandiose schemes it has announced in the budget. Hoping for tax collections to improve and more people to come under the tax net and hoping to finance the welfare schemes from that money is hoping too much.

On paper, the budget will give the necessary push needed to the economy. Massive investments are envisaged in the infrastructure sector. If all of them fructify, hundreds of thousands of jobs will be created and companies that provide materials to this sector, viz. cement, steel, pipes, bricks etc will see booming business. But all this can only happen if the finance minister can raise additional funds. Where is the money?

The health insurance scheme announced for 10 crore families (or 50 crore people, assuming 5 members per family) is truly majestic in its sweep. It will easily be the worldÂ’s most comprehensive government-funded health care scheme. Reports suggest that the premium will come to around Rs 1100 per year. That translates to Rs 11000 crore for covering the entire 10 crore families. Again, where is the money? The finance minister was at his ambiguous best when he said that "adequate funds will be provided for smooth implementation of this program." He did not think it fit to say how and when.

The farm sector does get benefits, but again these will happen only if the schemes announced are implemented. Further, there is a huge risk of runaway food inflation if minimum support price is enhanced too much. Instead, the decision to set up integrated marketing centres for farm produce is better. The government must ensure that there are not too many middlemen in the farm supply chain as they are the ones who corner the profits with the farmer not getting his due.

The prime minister had ranted against protectionism at Davos. Yet, in this budget customs duty on more than 100 products has been increased to protect domestic producers. Granted that it will bring in revenue too but setting up trade barriers is not the way to earn revenue.

If the finance minister is able to improve tax collection and finance the schemes, all will be good. But if indulges in financial profligacy and resorts to borrowing throwing fiscal deficit targets to the wind, it will spell doom for the economy in general and the financial services sector in particular. The NDA government has shown exemplary fiscal discipline in its first three years. One hopes that the trend will continue. As The Telegraph daily put it in its sub-headline, this budget tries to appease all but pleases none.