The backdrop of a global slowdown was weighing down very heavily on the expectations of this year’s Budget. With the demise of the commodity super cycle, slowdown in China, the economic fragility in Europe, it is now left to India to demonstrate its economic resilience and potential for long term growth. So there were a lot of expectations for a big bang policy Budget. However, the FM instead chose a professional, matter of fact approach to articulate the government’s priorities and focus areas classifying them in 9 categories. Staying on course for the fiscal deficit is an important indicator to the global investors and stakeholders that India will remain disciplined and focused on building strong foundations for sustainable long term growth.
Clearly the government has focussed it attention and monetary allocation on investing in the rural economy and agriculture with significant allocation of capital to irrigation projects and rural infrastructure. The proposals to take on the ambitious target of doubling farmers’ income, complete rural electrification across the country, provide e-platform to the farmer’s for better access to the market, launch a crop insurance scheme, significantly increase the allocation to the Gram Sabha and Gram Panchayats and enhancing the allocation on MNREGA are very significant steps to bridge the urban – rural disparity that India desperately needs.
In order to kick start the economy, the government has identified investments in the infrastructure including very material allocation to road and port projects. These public investments should trigger demand recovery in the economy going forward. The income declaration programme on unaccounted wealth, additional taxation on luxury cars and goods, clean energy cess on diesel cars, double taxation on dividends, taxing the withdrawals on retirement funds beyond the threshold are some of the measures the FM has used to balance his books.