The budget is an annual exercise in planning finances for the coming year. It assumes that a certain amount of money will be collected by the government from taxes, fees and loans and that money will be spent in different heads for development. It is an assumption and may not actually turn out so in course of the financial year, which will call for expenditure cuts, thereby negating all the projections for development of the economy.
The current economic scenario is a depressed one, with demand being low due to the non-availability of liquid incomes with the spending sector of the public. Hence to kickstart the economy, it is essential that the purchasing power of the public be restored and increased. This is proposed in the current budget by increasing the exemption limit for taxable incomes and decreasing the income tax in other slabs. Corporate income tax should also be reduced to allow corporates to invest in expansion and new projects to promote job creation and thereby disposable incomes. This is expected to change the jobless growth plaguing the economy. The budget has addressed the closing loopholes and unnecessary procedural requirements and simplifying tax paying procedures for easier compliance.
The government expenditure has been increased in the agricultural sector to allow for more cold storages to be built. This will help to increase the returns to farmers by preventing distress selling in the peak season. Expenditure in rural development has been increased, which will allow more money in the hands of rural citizens, thereby boosting demand and also promote job creation.
MSME Sector has also been selected for tax incentives along with the startup sector. Banking sector has also been listed for revival and expansion. More money will be pumped into the loan market which is expected to promote industrialisation and capacity expansion, thereby reactivating the economy. Steps have also taken to shore up the housing sector.
FDI in higher education will be a step to look ahead. The results will have to be seen depending on the investment forthcoming. The disinvestment in PSUs may scare a lot of investors especially in LICI, which serves a lot of middle class investors.
For the Northeast these measures will boost up public expenditure in the Northeast. The setting up of more cold storages will help in farmers getting more money for their produce and help horticulture and floriculture. Income tax rate lowering will be welcomed by the salaried staff of Assam and states where income tax is levied. The disinvestment in NEEPCO and NRL may not be good news for the Northeast. The cut in food subsidy may push up the price of food grains available under the PDS. In the PM Kisan Grant Scheme the reduction of allocation will reduce the number of beneficiaries covered. MNREGA allocations reduction may affect road building and other public works in the villages of the northeast, thereby affecting rural incomes. The development of the Brahmaputra waterway is welcome but there may be no perceptible resultant economic development immediately.
(Swapnanil Barua is a former bureaucrat. Views expressed are personal)