Budget 2019: Dream Budget! The stage is set for the next phase of growth
This last budget of the current government is a dream. The NDA came to power five years ago promising clean and good governance, more jobs and basic necessities of life for all people and it has kept its word substantially.
Today, for the first time, all Indians can have a realistic hope of having a roof over their heads, electricity and gas stoves in their homes, food on the table, water in the taps, access to toilets and roads, a bank account, a mobile connection, education for their children, and overall, a life of dignity. Many of the programmes undertaken by the government over the past five years will lead to these hopes being fulfilled within the next two years.
Having focused on reining in double digit inflation numbers to a low of 2.19 per cent in December 2018, the government has not lost track of GDP growth. This has been achieved without overspending, which could have led to an untenable deficit. From being the 11th largest economy in the world in 2013-14, we are today the sixth.
Despite many negative narratives run by vested interests, the government has performed phenomenally. GST has brought in efficiency and collections are picking up every month. Demonetisation has broken the back of the black economy and coupled with the digitisation of the collections systems, indirect tax filers have grown by an unprecedented 80 per cent and collections have gone up by almost 90 per cent. India has also undergone a remarkable transformation in infrastructure development with substantial improvements in coverage and quality of roads, railways, ports, and airports.
The fiscal situation is under control as the deficit stands at only 3.4 per cent for 2018-19. It has to be noted, however, that excluding the planned disbursal for the PM Kisan Yojana (Rs 20,000 crore for 2018-19 and Rs 75,000 crore for 2019-20), the fiscal deficit will meet the targeted 3.3 per cent for this year and 3.1 per cent for the following year. The quality of spending by the NDA has certainly gone up over the years, and the fears of the government having to dip into the RBI’s books, which were spread due to vested interests, have been proven to be unfounded. The debt management has been good with borrowings for the year being within a healthy range.
This budget has been well structured to meet the aspirations of most sections of society. Twelve crore small and marginal farmer families have been provided a direct annual income support of Rs 6,000 and 42 crore unorganised sector workers will benefit from a large new scheme providing a monthly pension of Rs 3,000. The Ayushman Bharat scheme launched last year will provide medical treatment to 50 crore people. The defence sector has been given a good leg up, the middle class has been provided a tax rebate on income upto Rs 5 lakh, and the salaried class has got an increased standard deduction of Rs 50,000. These measures are in line with the expectations of the people.
But while everybody has something to cheer about, start-ups have not received relief from the dreaded “angel tax” (section 56(2)(viib)), which is a tax on capital receipt from Indian investors if it is above the fair market value of the shares. The DIPP has called several start-ups and investors for a meeting on February 4 in Delhi and hopefully, relief has only been deferred and will not be denied.
The failure to remove the capital gains tax has also led to some disappointment. But the vision statement presents a well rounded, inclusive, and progressive approach to creating a “modern, technology driven, high growth, equitable, and transparent India.” This is a fantastic roadmap that works towards the aspirations of every individual and segment of India’s demography. Every political party should arrive at a consensus on this and work towards a common goal of holistic growth of all segments.
Despite this being an interim budget, it has all the foresight of a full-fledged budget. Some people have called it an election budget, which it undoubtedly is, as the party is gearing up for elections in May. Overall, however, this has been a great budget for the aam aadmi like the farmers, the middle class and vulnerable sections. The Finance Minister has done an impeccable job in articulating our progress in laying a strong foundation and must be congratulated for setting the stage for the next phase of growth for a New India.
With contributions from Yash Baid, Head of Research, 3one4 Capital.
The author is Chairman, Aarin Capital
