The general expectation was that Narendra Modi Government’s last full-fledged budget before the elections next year would be a please-all, soft one. In the end, it has pleased no-one, neither the poor nor the salaried middle class, not even the stock market except for a tax concession to small and medium enterprises.
Finance Minister Arun Jaitley has left the income-tax structure unchanged against the hopes of the middle class that the exemption limit would be increased from '2.5 lakh. Of course, he has reintroduced standard deduction up to '40,000 in lieu of transport and miscellaneous medical expenses. It will please the middle class. He has raised the deduction under health insurance premium to '50,000.
Fixed deposits and post office interest will be exempted till '50,000. He has given several tax reliefs to the senior citizens. They are already exempt from tax for income up to '3 lakh a year. They can claim a standard deduction of '50,000 for medical expenditure. Jaitley has extended the Pradhan Mantri Vaya Vandana Yojana (PMVVY) till March 2020 with an assured return of eight percent given by the LIC of India. The investment in this scheme for senior citizen under this scheme is doubled to '15 lakh, he added. He has raised the deduction under health insurance premium to '50,000.
In case of senior citizens with critical illnesses, the deduction will be '1 lakh. Fixed deposits and post office interest will be exempted till '50,000 and 80D benefit has also been enhanced to '50,000.
For the senior citizen aged between 60 and 80, there is no tax till '3 lakh, 20 percent on income between '3 to '5 lakh, and 30 percent for '10 lakh and above. The most welcome feature is the launch of a flagship ambitious national health scheme under which '5 lakh insurance cover will be provided a year to 10 crore poor and vulnerable sections Jaitley has announced a flagship National Health Protection Scheme under which '5 lakh cover will be provided for a family a year to 10 crore poor and vulnerable families in the country.
It will benefit 50 crore people. Aimed at doubling farmers’ income by 2022, Jaitley has said the minimum support price of all crops will be increased to at least 1.5 times of production cost.
A worrying factor is a fiscal deficit at 3.5 percent of the GDP. The stock market budgeted for over three percent of the GDP, but 3.5 percent is rather high and it will impact the economy.
