Centre reads ground signals from Gujarat

Finance Minister Arun Jaitley along with his Cabinet colleagues and officials leaving North Block in New Delhi on Thursday to present the budget.

Finance Minister Arun Jaitley along with his Cabinet colleagues and officials leaving North Block in New Delhi on Thursday to present the budget.  


The rural focus of the Union Budget comes ahead of the Assembly elections in Rajasthan, Madhya Pradesh, Chhattisgarh

When the BJP failed to make it to triple figures in the Gujarat Assembly polls held recently, a senior Minister involved in the elections had termed it an effect of “kapaas” (cotton) rather than PAAS (Patidar Anamat Andolan Samiti).

The message, he said, was very clear — it was rural distress and lack of remunerative prices for farm produce that had seen the opposition Congress sweep the countryside, while the BJP squeaked past the winning post on the back of urban voters.

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With elections due at the end of the year in BJP-ruled Madhya Pradesh, Rajasthan and Chhattisgarh and two of these States having seen very aggressive farmers’ agitation on remunerative prices, it was obvious that the Budget would have a rural, agriculture focus.

The Budget for 2018-19 appeared to be addressing that political gap. The other political takeaway was the long term programme of the BJP to move away from being an upper caste, upper class party to usurping what till now was termed the Congress and socialist parties’ vote bank of the rural and urban poor.

The announcement of a health insurance scheme for 10 crore households of up to ₹5 lakh has the capacity to spawn a huge narrative of inclusion from a government taking forward from programmes such as the subsidised LPG scheme and Ujjwala.

Health scheme

Finance Minister Arun Jaitley said in his speech that the health insurance scheme could be universalised in future — another very powerful idea in a country where health costs are prohibitive and attacks on doctors and hospitals for huge bills increasingly common.

The cut in corporate tax rates for small and medium enterprises to 25% , covering all but 7,000 businesses in the country is the third aspect of this narrative. Not quite the ‘pakoda seller’ but the small scale entrepreneur, who has a great capacity to create jobs, is being given a tax break. In this pro-poor, pro-farmer, pro-small enterprise narrative an interesting highlight is the restitution of long term capital gains tax. The government and the ruling party appears keen to project that not only does it care for the farmers and the poor, it is also not shy of taxing the rich, especially on its speculative income on the bourses.

“This was the year to bell the long term capital gains tax issue,” said a senior Minister. “It cannot be that the salaried classes be taxed and rich people investing in the market are not taxed on their profits,” he said.

It is however, with regard to the salaried middle class that some of the narrative could come unglued. The standard deduction of ₹40,000 on travel and health expenses haven’t quite masked the disappointment of no major changes in the personal income tax slabs. No answers could be found on whether there would be early general elections in this budget. “With a fiscal deficit target upwardly revised by only 30 basis point, to be 3.3% this is hardly a re-election budget,” said a senior Minister.

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Printable version | Jan 24, 2020 4:49:23 AM | https://www.thehindu.com/business/budget/centre-reads-ground-signals-from-gujarat/article22625353.ece

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