Five themes are apparent when we analyse the Union Budget 2019 in context of India’s vision for inclusive growth. What is clear is that the NDA continues to consolidate all decision making at the centre and sets out no clear goals for itself. Vague statements dictate all policymaking. The budget speech itself was merely a statement if vision and very little of a financial statement it is meant to be.
On education, the budget talks of the need to build capacities
The Union Budget’s Rs. 400 crore outlay to build ‘World Class Institutes’ is meagre. While the ‘Study in India’ initiative envisions India as a global hub of higher education, it will necessitate not only a friendlier visa scheme, but also a stricter focus on law and order so that foreign students feel safer. Most of these students will come from Muslim countries and the country is just not ready for them.
Another aspect where specific, capacity-building investments were needed was in agriculture. The idea to extend Ease of Doing Business to farmers aligns well with the vision of doubling farmer incomes by 2022. Specific announcements, in the form of policy interventions, should have better substantiated this vision. Similarly, the National Research Foundation (NRF), which aims to create a healthy national research ecosystem, must be examined for its viability. Intended to accelerate India’s knowledge and innovation infrastructure, the NRF must stay free of ideological bias. Else it will become another tool to further the Sangh agenda
The missing ‘big ticket’ numbers
The budget also ran short of the excitement that had been built regarding ‘big-ticket announcements’. When Sitharaman invoked Vivekanda’s statement on the necessity to empower women, it seemed a poignant precursor to something significant. Here, the Rs.5000 per SHG worker in overdraft (and a Rs. 1 lakh MUDRA loan for one woman per SHG) was, frankly, anti-climactic. Even the announcement of easing local sourcing norms for FDI in Single Brand Retail and opening up FDI in aviation and media would have been taken better by industry if delivered with specific numbers.
The Budget’s pro-business sentiment
The NDA government has been consistent in its emphasis of small and medium enterprise growth, and many were eager to see this MSME-momentum continue. Two announcements today stand out: the fast loan for MSMEs and the startup focused TV channel. On paper, the idea of loans up to Rs 1 crore for MSMEs, and that too within 59 minutes, sounds exciting. The TV channel for startups, which is to be executed by startups themselves sounds exactly like the channel for farmers announced in a previous budget. This new channel, the Hon’ble Minister said, will serve as a platform to promote startups, enable funding access, and discuss growth hurdles. Yet, a similar TV channel initiative – ‘Kisan Television’ – had been announced in Budget 2014 – of which nothing has been heard. The terms and conditions of this 1 crore 59-minute loan too must be clear to encourage MSME interest.
Revenue mobilisation
Spurring on investment in India will be a cost-intensive exercise, for which capital must be mobilised. While India’s sovereign external debt to GDP is among the lowest globally, borrowing more from external sources – especially when the rupee is already at 70 to a dollar – will only increase our current account deficit. Similarly, while intended to promote a cashless economy and mobilisation of revenue, the 2% penalty for bank withdrawals of over a crore in one year, and a surcharge for those earning more than Rs 2 crore are detrimental. These will impact a few, and only raise minimal revenue.
Middle class aspirations
The Budget’s most eager audience were perhaps the middle class. In terms of immediate benefits, they only received a tax benefit on Affordable Housing homes. This demographic will not care much for the increase in prices of imported books, petrol, newsprint, cashews, cameras, or tiles. However, each of these increases in tariff is reminder of a regime we had left behind in 1991. Gold smugglers now are back in business, with import duties going up to 12.5 per cent.