The countdown is over as Finance Minister Arun Jaitley will unveil the Union Budget 2018 today – the fifth and arguably most crucial one of the Modi government. People’s expectations are soaring high as to what comes out of Jaitley’s briefcase.
Jaitley will present the Union Budget 2018-19 at 11 am today during the Budget Session of the Parliament. The Budget speech will be telecasted live across news channels in India. Viewers can watch the LIVE telecast of the Union Budget 2018-19 on Lok Sabha television from 11 am onwards on Thursday. It can also be seen on the YouTube webcast of Rajya Sabha TV.
The budget is being keenly watched as it will be the first after the implementation of Goods and Services Tax (GST).
Meanwhile, experts believe that this will be the toughest budget for the Modi government as it seeks to address agricultural distress, create jobs and boost growth while at the same time stick to fiscal prudence.
Agriculture may be top priority
The budget, which comes close on the heels of a tough electoral fight in PM Modi’s home state Gujarat, is expected to please everyone. An obvious reason will be the mighty scare that the government got in a state where it has been in power for over two decades amid agricultural crisis and rural distress accentuated by the loss of employment on account of poor growth in manufacturing and farm sectors.
The results in a handful of Gujarat districts highlighted farmers’ issues that the government needs to address on. Whether or not the Budget turns out to be a populist one, higher spending on rural India is the need of the hour.
The Budget, in view of upcoming assembly polls in eight states - including three major states ruled by the BJP - and general elections next year, may see new rural schemes and stepping up of funding towards existing programmes like MNREGA, rural housing, irrigation projects and crop insurance.
The government is likely to increase the budget allocation for farm education, research and extension by up to 15 per cent to around Rs 8,000 crore in 2018-19 fiscal as focus will on making rapid strides in doubling farmers' income, one of BJP’s top poll promises before the 2014 general elections and 2017 Uttar Pradesh Assembly polls.
Income tax sops for middle class ?
There is also an expectation that common man may get some relief in income tax by way of a raise in the exemption limit.
According to government sources, the proposals before the finance ministry is to hike the tax exemption limit from the existing Rs 2.5 lakh per annum to at least Rs 3 lakh.
Also, the government may re-introduce standard deduction for salaried individuals. The industry bodies have suggested giving standard deduction of at least Rs 1 lakh on salary in Union Budget 2018 to ease tax burden and give salaried employees more money in hand to deal with rising inflation. Standard deduction on salary was done away with in 2006-07.
Will infrastructure sector get another big boost ?
In 2017 budget, the government had allocated a record Rs 3.96 lakh crore to the infrastructure sector to spur economic activities and create more jobs.
The massive push is likely to continue with the infrastructure sector being on agenda in the upcoming budget as well. As this is going to be the last full-fledged Budget of the government before the 2019 general elections, investment in infrastructure sector is going to serve a dual purpose – development and job creation.
There are at least 10 big infrastructure projects in the pipeline including Rs 12 lakh crore Sagarmala project and Rs 14,000 crore Bharatmala project. Moreover, the ambitious Bullet Train project will need at least Rs 1.1 lakh crore of investment during the 2017-22 period.
Meanwhile, the government is also pegging Rs 20 lakh crore investment plan for high-speed corridors and other projects for the modernisation.
On the other hand, the realty sector – severely impacted by various reforms such as RERA, GST and demonetization – is pinning its hopes for relief measures like lower taxes and infrastructure status.
Job creation the need of hour
Job creation is another concern that has added to the Modi government’s woes as the Opposition has been raising the issue time and again to corner the Centre.
Prime Minister Narendra Modi, in his campaign for the 2014 general elections, had promised to create 10 million jobs a year for the youth. However, with over three years into power, what has been witnessed is a marginal rise in the unemployment rate.
The issue of job crisis has the potential to harm the electoral prospects of the BJP in the crucial upcoming elections.
Experts believe that a National Employment Policy (NEP) will be introduced in the Budget, which will outline a comprehensive road map for creation of quality jobs across sectors through economic, social and labour policy.
There are high expectations that the government will make some major announcements regarding jobs.
Experts believe that a National Employment Policy (NEP) will be introduced in the Budget, which will outline a comprehensive road map for creation of quality jobs across sectors through economic, social and labour policy.
Since most of the jobs created in India are in the informal sector, the policy would seek to reverse this trend. About 90 per cent of workers are engaged in informal employment, not covered by any social security law and most likely not getting the minimum wage.
Experts believe that a special focus in the Budget will be on sectors like manufacturing and agriculture which are employment driven.
Overhaul of Railways on the cards?
Complete modernisation of Indian Railways' entire signalling system, including automation, at a whopping cost of Rs 78,000 crore is likely to get the nod among other safety measures in the forthcoming budget.
The Railways, which is likely to get Rs 65,000 crore as gross budgetary support (GBS) this time, an increase of Rs 10,000 crore from the last one, is going ahead full throttle to generate funds from internal resources and also from the market to meet the huge requirement for infrastructure development and safety-enhancement measures.
Safety and passenger amenities are likely to get top billing in the rail budget -- merged with the general budget since the last fiscal.
Replacement of the existing signalling network with a state-of-the-art system, proliferation of electronic interlocking systems, introduction of the European Train Control System Level-2 and mobile train radio communication systems are part of the upgradation agenda of the Railways, which has drawn up a detailed plan to change the system over the next five years.
The government has to do all this while sticking to the road map of narrowing one of Asia's largest budget deficits, as failing which, India may fall on the wrong side of global investors and credit rating agencies which had late last year handed out a rare sovereign upgrade.
The target Jaitley had previously set out was to lower the fiscal deficit to 3.2 per cent of the GDP in the current fiscal and to 3 per cent in 2018-19, the Budget for which he would present in the Lok Sabha tomorrow.
Prime Minister Narendra Modi seemed to have already lowered expectations of mass voter swaying announcements when he indicated that the Budget may not be resort to populism and that it was a myth that common man wants sop.
However, ahead of the Budget Session, he said that the upcoming budget will fulfil everyone’s dreams.
“The budget will add new vigour to India’s development and will fulfil aspirations of people,” he said ahead of the start of Budget Session.
While PM Modi has time and again said that the Budget 2018 will not be a ‘populist’ one, experts believe that it will be an attempt by the government to appease the common man.
