Budget 2019-20: Strong in spirit and substance but not not so strong on specifics

Published: February 4, 2019 2:43:35 AM

Interim Budget is strong in spirit and substance—although it could have been stronger on specifics.

To give the government its due credit, the India of 2019 is more formal, transparent and vibrant one vis-à-vis that of 2014.

By Paul Dupuis

True of any government presenting its final Budget, the Interim Budget 2019 was presented as one that underscored the importance of the reforms being driven by this administration. As the finance minister pointed out, these were structural not incremental ones that will bode well for the country over the long term. To give the government its due credit, the India of 2019 is more formal, transparent and vibrant one vis-à-vis that of 2014.

This Budget goes beyond being a mere report card as it attempts to walk the fine balance in appealing to and addressing key constituencies (farmers, the middle class, SMBs), while trying to stay true to its reformist credentials.

While having populist overtones—the announcement of a direct benefit transfer scheme for marginal farmers, a universal pension scheme that strengthens the social safety net for even the informal workforce, and relaxation of income taxes for those making up to Rs 5 lakh—the government indicated that it will stick to the path of prudence with the fiscal deficit target for the year marginally increasing to 3.4% of GDP. The announcements underscore India’s consumption-led economic growth model. Incremental disposable income in the hands of a majority of the population should bode well for the growth prospects of several consumer-focused industries—retail, FMCG, food & beverages, financial services, insurance, travel and hospitality, to name a few.

Most importantly, the government’s vision for what the country should be by 2030 is both aspirational and, if the right elements fall in place, achievable. From the identification of artificial intelligence as a critical pillar to ensure the continued sustenance of India’s IT industry, to India’s leading role in the adoption of renewable energy—evidenced by its status as a founding member of the International Solar Alliance and the 10x increase in installed solar capacity—the government is clear that the pathway to its goal of becoming a $10-trillion economy is a solid one. All this in addition to the continued focus on infrastructure, a liberalised regulatory compliance framework, the continued effort to include the marginalised in India’s economic growth story, and modernising the government’s way of functioning.

While it would have been nice to have seen some policy announcements encouraging formal job creation, it was heartening to note that India is now home to the second-largest number of start-ups. A true testament to the entrepreneurial spirit of the nation’s citizens and the enabling framework put together by the current government. In short, I would sum this Interim Budget as one that is strong in spirit and substance—although it could have been stronger on specifics.

-The author is MD and CEO, Randstad India

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