Modi Sarkar’s silver bullet in interim budget – Bonanza for farmers, middle class

While the Opposition might say it is an election budget with an eye on the voter the fact remains that the middle class is the beneficiary of what has been announced today.

People watch the interim Union Budget session 2019-20 being screened outside Bombay Stock Exchange (BSE), in Mumbai, Friday, Feb 1, 2019. PIC/PTI.

New Delhi: Keep a close eye on the approaching Lok Sabha polls, the widely- anticipated interim budget presented in Parliament on Friday by Finance Minister Piyush Goyal. The focus was kept on farmers and the salaried class. The centerpiece attraction obviously was the big relief in income-tax and the sops to the small farmer, animal husbandry and fisheries sectors. Some of the key takeaways are Farmers: Under the PM Kisan Samman Nidhi, farmers with less than two hectares to be offered Rs 6,000 per year as a direct transfer under PM Kisaan Samman Nidhi. The benefit will be transferred directly into the bank account of beneficiary farmers in three installments of Rs 2,000 each. It is said around 12 crore farmers are expected to benefit from the scheme. This scheme will cost around Rs 75,000 crore. Unorganized Workers: To safely cover the colossal amount of unorganized workers, the government announced a monthly pension of Rs 3,000 for them. This is a contributory scheme with the Government matching the subscriber’s contribution. Salaried Class: Obviously the centerpiece in this year’s budget is the New Middle Class. Income tax limit has been doubled from the current Rs 2.5 lakh to Rs 5 lakh per annum. In addition, standard deduction has been increased from Rs 40,000 to Rs 50,000 and gratuity limit has been increased from Rs 10 lakhs to Rs 20 lakhs. Interest rate exemption: Tax Deducted at source (TDS) has been increased from Rs 10,000 to Rs 40,000. This would help those who have invested their nest egg in banks and post-offices as fixed deposits. Defence expenditure: The budgetary support towards defence expenditure has been raised to a little over Rs 3 lakh crore. This was more or less on expected lines as the country has been increasing the budget periodically considering the country’s porous borders. In the previous fiscal, NREGS was allocated Rs 55,000 crore MNREGA allocations: There has also been a marginal increase in support to the MNREGA scheme raising it Rs 60,000 crore. Free LPGs: Finance Minister Piyush Goyal has announced that the government aims to provide free LPG gas connections to 8 crore families under the Ujjwala scheme by 2020. Real Estate: There is something to cheer the sector in this budget. A number of measures have been announced to help the ailing real estate sector both directly and indirectly. The builders have been given some relief by extending their exemption (notional income) on unsold inventory from one year to two years. For house owners, the notional rent on the second self-occupied house has been done away with while the TDS threshold of rent has been increased to Rs 1.8 lakh to Rs 2.4 lakh. In addition, the budget proposes to rollover capital gains for section 54 to be increased from one residential house to two residential houses (for capital gains up to Rs 2 Crore). Disinvestment: The target for disinvestment target has also been raised to Rs 90,000 crore for the financial year 2019-20, which is up by 12.5 percent year-on-year from the current year's target. The markets have generally given a thumbs up to the prudent and populist measures announced in the budget. Though it is not a please-all budget, by and large, the markets have been bullish though there was a partial booking of profits as the markets inched towards the closing bell across the bourses. While the Opposition might say it is an election budget with an eye on the voter the fact remains that the middle class is the beneficiary of what has been announced today. That said, the main budget will be in July this year after the elections and that might reflect the true tone and complexion of the Government’s intention to rein in the fiscal deficit which according to some is looming large.