No WOW factor but budget deepens ongoing reforms

There were no crackers in this budget, no WOW factor as the Economic Survey had.

It was not very different from predecessor Manmhoan Singh’s budgets or finance minister Arun Jaitley’s earlier budgets except for the ‘Robin Hood effect’ as the rich would call it.

Read: Budget 2016: Jaitley announces 9 pillars for transforming India

This was evident in the modest 15 per cent surcharge. Those earning above Re 1 crore annually would pay a total of 35 and a half per cent tax. Luxury items like petrol and diesel cars will also cost more and so will aviation fuel. But the rich have got off lightly compared to what was proposed in the Economic Survey to cut the Rs1.3 lakh crore subsidy the government lavishes on them. Those who declare their unaccounted money will pay higher penalties and all these extras will go towards developing rural areas and agriculture.

Overall, there is nothing radically new in the budget besides deepening the existing ongoing tax reforms, making it simpler to pay taxes, incentives to create new jobs, new schemes under education and skill development and healthcare programmes and to encourage entrepreneurship among the 2.5 lakh scheduled caste entrepreneurs initially.

Read: Budget 2016 focuses on farmers, ‘backbone of country’s food security’

All the Prime Minister’s yognas and abhiyans got more funds and there are some new schemes in the name of other leaders like Dr Ambedkar and Shamaprasad Mukherjee.

The Sensex went berserk losing nearly three hundred points during the budget speech but recovered soon after when reality dawned the budget had interesting reforms on taxation, tax dispute resolution etc. Market was, however, down again later in the day.  

Among the beneficiaries are the middle class, the small taxpayer earning below Rs 5 lakh who will get Rs 3,000 relief from tax liability, the small and medium businessman, government employees who will benefit from the initial implementation of the 7thPay Commission award, those who live in rented houses, and start-ups who will be able to establish their company in a day.

There are also some measures for ease of doing business. The strong emphasis on reviving agricultural growth in the Economic Survey was not very evident in Mr Jaitley’s budget though to be fair, there was a focus on rural India or Bharat, which was not there earlier. Rural development got a total of R 87,765 crore. Women households totaling 1.5 crore for instance will get gas connections and young men will get employment through distribution. 

Jaitley with much aplomb announced the income of farmers would double by 2022. But he didn’t say how. Will he increase the minimum support price every year by 15-20 per cent and will farmers get this when they go to sell in the market? While irrigated land farmers have irrigation programmes, the rain fed, dry farmers have been left high and dry. Even crop insurance scheme is not being done at the village level.

There is nothing to increase the purchasing power of the agricultural labourer like increasing the minimum wage. The National Rural Employment Guarantee Scheme has received the highest funds ever but unless the minimum wage of labourers are increased to some extent like those of the class four government employees who will get Rs 18,000 a month, there will not be much improvement in their quality of life. Unorganised labour does not have much in this budget.

Maybe, the fine print tells a better story.