Political messaging guides Budget’s welfare focus

Hike in funds for women, SCs/STs points to govt.’s priorities

July 05, 2019 10:52 pm | Updated July 06, 2019 12:08 am IST - NEW DELHI

The first Budget of the second Modi government appeared to be of a continuum of the last with an emphasis on social welfare. This includes a bank overdraft facility of ₹5000 for women members of Self Help Groups (SHG) and an identification with the poor, while the rich (those with incomes between ₹2 and 5 crore and ₹5 crore and above) have been hit with a hike in surcharge.

Government sources said the surcharge, aimed at the rich would net the exchequer around ₹12,000 crore, and will offset the loss of ₹4000 crore from the slashing of corporate tax. The political optics of taxing the rich is quite potent and the government appears mindful of that.

The hike in allocations for women (10%), Scheduled Castes (30%) and Scheduled Tribes (25%) is also an important pointer to the government’s priorities, one that is again full of political signalling.

Infrastructure push

There was a lot of stress on infrastructure development, including tax relief for affordable housing, with a proposed tax holiday for developers of affordable housing and an additional deduction of upto ₹1.5 lakh for interest on home loans borrowed upto March 31, 2020. Announcements of targets for construction of 1.95 crore houses under the Pradhan Mantri Awas Yojana (PMAY) and allocation of ₹80,250 crore on upgradation of rural roads under the Pradhan Mantri Gram Sadak Yojana were also made.

Much of the allocations for farmers was done in February’s interim budget including the Pradhan Mantri Kisan Samman Nidhi. The announcements for the farm sector this time were more on structural issues related to farmers, but nothing with the razzmatazz of February’s announcements.

The one announcement that hit a false note in this narrative was the hike of ₹2 per litre on petrol via not just hiking of prices by ₹1 but also a Road and Infrastructure Cess.

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