The best and one of the more charitable descriptions of Arun Jaitley’s budget speech was given by a participant during a TV discussion this afternoon. The budget was meant as a ‘calming’ exercise, he said, after the shock of Demonetisation. The Finance Minister did not want to have fireworks but instead wanted to project a ‘business as usual’ message to the market, which explains the absence of big bangs.
There were others who complimented the budget for restricting cash transactions to ₹3 lakhs. But with the recent memory of Birla and Sahara Group of companies caught with ₹25 crore and ₹137 crore in cash to meet contingencies, critics doubted if the restriction would have the desired effect of curbing black money.
While the Prime Minister also went on Television to compliment the Finance Minister and his team for a ‘brilliant’ budget, the budget appears to have left most observers cold, who felt ‘bland’ to be a more apt description. Others defended the FM by pointing out that he had a tough task to present a budget that would steer the course, and hence stayed away from radical measures.
The opposition slammed the budget for being clueless and for not focusing enough on creation of jobs. Critics were dismayed at the social sectors like Education and Health, Railways and Defence getting perfunctory mention in Mr Jaitley’s budget speech.
Reduction of tax rates for people with annual income of ₹5 lakhs and for Small & Medium Enterprises with a turnover of less than ₹50 crore per annum received a mixed response, with first-time entrepreneurs pointing out that tax laws remained very complicated and a steep service tax regime was making them struggle.
The Chief Economic Advisor to the Government, Arvind Subramanian, also complimented the budget for maintaining consistency in fiscal consolidation and keeping the fiscal deficit down to 3.2%. He also welcomed the commitment to expenditure on infrastructure in rural areas, which he hoped would give a boost to jobs, consumption and demand.
There were others who welcomed the move to reduce anonymous political funding from ₹20,000 to ₹2,000. But without much clarity on how the political Bonds proposed by the FM would work and be regulated, the reaction from political parties was muted. Observers, however, were quick to point out that this would merely increase the paperwork of political parties but not much else unless there is a requirement to identify even the smallest of donors.
Expectations of both the corporate sector as well as the farm sectors were belied, with farmers bitterly pointing out that enhancing credit limits was meaningless because most small farmers were in no position to pay back existing loans. Drought in the previous two years, they said, had broken their back and the cash-ban came as the last straw. They questioned the Finance Minister’s figures and accused him of comparing sowing areas this year, blessed by a good monsoon, with the drought year.
Experts were also quick to ridicule the Finance Minister’s commitment to double farmers’ income in five years. To achieve the target, they claimed, Agriculture would have to grow at 12% per annum, something which has not been recorded anywhere in the world over the last 200 years. In most countries agriculture growth ranges between 2-4%, they pointed out, and declared that the target set by the FM was impossible to achieve.
While bankers felt that the ₹10,000 crore allocation for restructuring public sector banks’ liabilities was too little, the CEA explained that the issue would be engaging policy makers in the next few months and hinted at more action to be taken.
So, will the budget boost rural income, jobs and consumption? The bullish tone and the rosy picture given by the FM, noted Yogendra Yadav, belied the modest figures. Well, let us say the jury is still out.