The finance minister has rolled out various initiatives for small businesses in the medium, small and micro enterprises (MSME) sector, with a focus on labour intensive businesses such as those in footwear, toys, food processing, among others
Amid high global volatility, Union finance minister Nirmala Sitharaman appears to have shifted her focus to fulfilling people’s basic necessities, moving away from oft-practised trickle-down economics and giving more money in the hands of people, whose purchasing power was stunted because of high inflation and low wage growth, while also encouraging agriculture and small businesses which are the largest employer in the country.
The revenue foregone on the account of revision in income tax slabs is around Rs 1 lakh crore, which is the biggest tranche of money that the Narendra Modi government has ever given to the people from the middle class directly. This money is expected to boost the consumption in the domestic market and restart the virtuous cycle in the economy.
The finance minister has rolled out various initiatives for small businesses in the medium, small and micro enterprises (MSME) sector, with a focus on labour intensive businesses such as those in footwear, toys, food processing, among others. She also offered support for the participants of informal economy such as gig workers and street vendors by offering formal lending or social security.
Agriculture was the biggest beneficiary of the budget. The minister proposed new schemes like PM Dhan-Dhaanya Yojana, National Mission on High Yielding Seeds and Mission for Cotton Productivity. While Dhan-Dhaanya Yojana will focus on hand-holding 100 districts which have low farm productivity, the high yield seeds mission has the potential of unleashing a new Green Revolution.
There were no big ticket infrastructure projects in the Budget. However, the minister’s proposal to facilitate interest-free 50-year loans of Rs 1.5 lakh crores for states and Rs 1 lakh crore funding for bankable projects in cities will keep the crucial infrastructure sector well-oiled.
With the world embracing advanced technologies, Ms Sitharaman has of late taken baby steps to encourage scientific temper among schoolchildren by setting up Atal Tinkering Labs in government schools and proposing to increase the number of seats in IITs and medical colleges. The centre of excellence in artificial intelligence for education and a proposal to make various books available in Indian languages will democratise knowledge for large sections of Indian citizens who cannot comprehend English.
The proposal to open up the insurance sector for 100 per cent foreign direct investment is yet another important announcement in the Budget. While it is conditional upon foreign insurers investing insurance premium in India, this proposal completely reverses the insurance nationalisation process that began in 1956 with the Life Insurance Corporation absorbing 154 Indian and 16 foreign life insurers.
The defence ministry continues to get the largest allocation at Rs 4.91 lakh crores. Of this, Rs 1.8 lakh crores was earmarked for the capital expenditure to acquire new assets for the armed forces, which is a steep rise over Rs 1.59 lakh crores last year.
There are no major stock market moving announcements in the Budget as evident from the lacklustre reception given to it by the Sensex which ended flat. However, companies have nobody else but themselves to blame as they overlooked the need to increase wages, forcing the government to step in. In a nutshell, Nirmala Sitharaman has won the hearts of the middle classes.
