Through this Union Budget, while addressing the key areas of agriculture, low cost housing, infrastructure and health insurance, all requiring attention, it is commendable that the Union Finance Minister has also managed to keep the budgetary deficit at 3.3% of GDP for 2018-19.
Niti Aayog’s efforts to ensure institutional capital to lessee cultivators is a welcome move towards creating efficient lease markets and increased arable land. Small and marginal farmers will gain closer access to markets through moves such as upgradation of rural haats to GrAMS, expanding the eNAM network and setting up agri market infra fund.
The plan to increase Minimum Support Price (MSP) to 1.5 times the cost of produce for kharif crops is a positive move; however, the inflationary impact on the economy needs to be assessed. Liberalising export of agri commodities can increase openness of trade and boost farmer income.
Liquidity in rural markets
Encouraging Farmer Producer Organisations through 100% tax deduction, promoting cluster-based organic farming by Self Help Groups and the roll out of ‘Operation Greens’ is a necessary shot in the arm for increasing agricultural productivity.
The move on MSP and the increase in the agriculture credit to ₹11 lakh crore will hopefully address the issues of farm income and create liquidity in the rural markets. In the long run, it may be useful to have a price stabilisation fund for all major crops.
Another area of focus in the Union Budget is the MSME sector. Reduction of the corporate tax rates and increased credit support are expected to boost employment and profitability in the sector.
MSME sector will also benefit from the plan to introduce the Defence Production Policy 2018 to promote public private partnership in the defence sector, leading to increased private sector and MSME participation.
Health coverage
The launch of the government-funded National Health Protection Scheme for poor and vulnerable families, aimed at providing insurance cover of ₹5 lakh per family to 10 crore families, will ensure improved healthcare coverage.
Other favourable measures include the standard deduction for salaried persons and the various tax exemption measures for senior citizens and pensioners.
Substantial allocations have been made towards affordable housing (₹27,500 crore), PM Rural Road Plan (₹19,000 crore), National Education Mission (₹32,600 crore) and Swachh Bharat (₹17,800 crore).
The Budget will boost agriculture, rural development, healthcare and education, MSME and infrastructure sectors, while also providing relief to senior citizens and small corporates.
In all, I expect the economy will see both short and long term benefits due to the sustained focus on structural reforms, skill development and employment generation.
A. Vellayan Executive Chairman, Murugappa Group
