What made the Budget stand out is its strong focus on rural markets and the farm sector. The FM has announced measures that will boost long-term sustainable growth by improving the health of the farm and rural sector. These measures will positively impact the economy via increased rural consumption.
A clear trend is emphasis on social development initiatives. It is heartening that the government intends to work towards improving India’s quality-of-life metrics. The theme for 2018 is obvious—inclusive growth, or to put it simply, “Making India Better”.
The focus on the farm sector is a reliable indicator. The agriculture sector contributes only about 17% to the GDP, but is responsible for the livelihoods of over half of the workforce and is, hence, entitled to greater state support.
The Budget indicates that the government hopes to reduce market challenges and alleviate livelihood conditions in India’s agricultural economy. The Rs 11 lakh crore agri-credit announced will go a long way. Instead of the conventional route of farm subsidies, the government has delivered relief via MSP linked to production costs. MSPs will be fixed at 1.5 times production costs, a move that should make life better for Indian farmers, who suffer from unpredictable weather conditions.
Another trend in the 2018 Budget is a slew of social upliftment-related measures focused on quality of life. About eight crore women will get free gas connections. Housing for all by 2022 is another target. Moreover, the National Health Protection scheme will cover 10 crore deserving families. Education came under the government scanner with the move to transition classrooms towards digital literacy. The minister has also announced funds for skilling India’s youth.
Income Tax Calculator: Find out how Budget 2018 will impact your finances
To strengthen India’s capability to hold its own in the rapidly changing global marketplace, the government reaffirmed its focus on digital initiatives. For instance, the move to shift from cash to e-payments at toll booths and the national programme to raise India’s capabilities in AI. Plans to connect 2.5 lakh villages to the digital world via optical fibre and five lakh WiFi spots to benefit five crore rural citizens may open up new digital avenues.
Industrial India will benefit thanks to the stance on developing core infrastructure. More roads will be built, the railways will shift entirely to broad gauge and electrification, and air infra will be enhanced five-fold to enable 1 billion trips, annually.
This will have a direct impact on transportation, construction, heavy engineering and logistics. It will also enable greater efficiencies by reducing time-to-market for goods and services. The MSME sector came in for strong support, the highlight being cut in corporate tax to 25% for thousands of organisations, with turnover less than `250 crore. Collectively, these form the bedrock of our vibrant economy.
The Budget also holds out positives for urban India, which will benefit from Smart Cities initiative and the promise of new railway facilities.
Overall, the government signalled its firm intention to boost infrastructure by allotting a budget of about `50 lakh crore. This move will have a positive ripple effect for both industry and the jobs market.
India, today, is a $2.5-trillion economy. The GDP growth has been forecast at the 7.2-7.5% for the second half of 2018. The government is also standing fast by its intent to practice fiscal discipline—the 3.5% fiscal deficit for FY18 was met,and the goal for FY19 has been set at 3.3%.
The 2018 Budget is focused on the farm and social sectors. Regardless, its reforms and infras initiatives augur well for the industry and services sector too.
By Kumar Mangalam Birla, Chairman, Aditya Birla Group. Views are personal