Budget: Modi stays the course, pushes strategic reforms

Union Finance Minister Arun Jaitley’s third Budget has an element of continuity and consistency that shows Modi Government is proceeding on a clear strategic path. It is characterised by a sense of realism that seeks to raise the ante without rocking the boat. Jaitley’s Budget speech was marked by transparency on performance and intentions. This certainly raises the credibility of the Modi Government both within the country as well as among international observers. If people were expecting major largesse to wipe off any residual negativity from demonetisation or massive populism with the State Assembly elections in the offing, they were either disappointed or pleasantly surprised depending on which side of the aisle they were sitting. Staying on course with the goal of rapid digitisation indicates going “cash-less” was not just a winter flavour in the season of 'note-bandi'. Initiatives like referral bonus and cash-back for traders on BHIM and Emergency response cell for the financial sector shows the Government sees conversion from cash to e-transaction as a powerful lever to lift the iceberg of black economy. Limiting cash transactions to Rs 3 lakh demonstrates the same resolve. However, waiving service tax may not have as much impact on customers buying railway e-tickets as introducing High Speed Internet under Bharat Net project, given the perennial connectivity problems of the IRCTC site. Putting a cap on political donations paid in cash and improvising a system of special RBI coupons for political contributions shows the Government is serious about electoral reforms. Though it is a small beginning, but following close on the heels of demonetisation it is a proof of Prime Minister Narendra Modi willing to walk the talk. The abolition of FIPB and promise of further simplification of FDI rules are significant steps towards ease of doing business. Creating a Rs 1.25 lakh crore package to make India an electronic hub is smart stimulus. But other than that, there is not much in the Budget to directly catalyse private sector investment. It seem the Finance Minister is betting upon the effects of demonetisation to wear out and a tail wind developing from transition to GST to boost growth. While the former cannot last forever, the short-term impact of GST is difficult guess. There were no prizes announced for predicting that the major thrust of the Budget would be on infrastructure and rural welfare schemes. However, it is interesting to note that while increasing allocations for old schemes like MNREGA, the Government has been mindful of its productive use for creating rural assets and plugging leakages. The use of satellite technology to monitor MNREGA is an innovative measure to monitor implementation. The Budget maintains the thrust on social welfare, especially for women and senior citizens. Two big ticket investments that Modi appears to be banking on for 2019 are rural electrification and housing for the homeless. If these two are delivered as per target he will totally redeem himself of the ‘suit-boot’ label.

The lowering of income tax at the lowest slab and addition of a 10% surcharge on the Rs 50 lakh to Rs 1 crore earners is an illustration of how this Government is helping the lowest rung of tax payers who still run into 20 million people.

That will have to be a long and tough haul, for which the Finance Minister’s dependence on indirect taxes will not go down in a hurry. Having set the foundation of the innings with a steady bat for three rounds, Modi can be expected to step up the run rate next year. May be we shall see a new younger batsman on the crease to play the last slog overs. Disclaimer: The opinions, beliefs and views expressed by the various authors and forum participants on this website are personal and do not reflect the opinions, beliefs and views of ABP News Network Pvt Ltd.