New Delhi: Union Finance Minister Nirmala Sitharaman presented the Union Budget, for the year 2010-21, in the Lok Sabha. It is claimed that the relief for the people in the income group 500,000 to 1,500,000, in the income tax, is the highlight of the budget. It is also claimed that as the person will have to forgo the allowed deductions, this relief will not be beneficial for the taxpayer. But the Union Finance Minister has rubbished these claims. At the same time, the highest priority has been given to the infrastructure development in the agriculture and manufacturing sector, attempting to increase the speed of national development.
Prime Minister Narendra Modi expressed confidence that this budget will strengthen the foundations of the nation’s economy. Finance Minister Sitharaman announced the tax rate cuts saying that if there is more money in the hands of the middle class, they will spend more, increasing the demand. The taxpayers have been divided into five slabs and people with earnings in the range of 500,000 to 1,500,000 have been given the maximum concession. But the experts are pointing out that to avail this benefit; they will have to forgo the allowed deductions. Therefore, the experts say that the taxpayer will not be benefited to a great extent. But Nirmala Sitharaman has dismissed these claims saying that certain deductions have been retained.
Against the background of this confusion, the stock market recorded a slump. But as per some economists, the share market crash, following the budget, was seen because unreasonable demands of the investors did not meet.
Nirmala Sitharaman said that the principles behind the budget were, country’s aspirations, all-inclusive economic development, and society benefit. The budget focuses on the 61.1 million farmers with an objective of doubling the income in their hands, by 2022. The Union Finance Minister said that the development of agro-businesses is being stressed upon to achieve this increase in the farmers’ earnings.
Sitharaman clarified that more efforts will be going into the transport and storage of the agricultural produce. The budget earmarks ₹15 trillion for agricultural financing. This budget has a provision of ₹1.07 trillion for the development of infrastructural facilities. This will have a very positive impact on the economy. The government will soon announce the National Logistics policy. Important decisions have been announced to provide and impetus for the building industry and six more smart cities will be developed.
There is a provision of ₹3.37 trillion for defence and of this ₹1.13 trillion has been set aside for the purchase of new weapons and defence systems. ₹2.09 trillion will be spent on salaries of the defence staff the maintenance of the existing defence systems and other essential items. Some bold decisions and constructive reforms were expected in the budget. Economists criticised that the government has not taken steps in that direction. Whereas, some have passed the verdict that the budget is the best possible budget, in the current scenario. One cannot have major expectations from the budget every time. Analysts are pointing out that even in the developed countries, economic policies are being given a higher priority that the budget.
The government had minimal options as the revenue collections have come down. Therefore, the government decided to try and give and impetus to the economy by increasing the fiscal deficit by 0.5%. This is the correct decision to provide a thrust to the economy. But the economists are warning that the government will have to take corrective measures to bring the fiscal deficit back under control. Whereas, Finance Minister Nirmala Sitharaman announced that the revenues from GST would increase substantially in the coming times and these funds will be used to provide a thrust to the economy.
Foreign Ministry also has been allocated ₹17,3 billion. ₹1 billion has been earmarked for the development of the Iranian Chabahar port, undertaken by India. This port will facilitate the freight movement from India to Afghanistan, through Iran, eliminating Pakistani obstacle.
At the same time, the aid and concessions provided by India to other countries has been reduced by ₹560 million. Provision for Myanmar has been increased and this year, India will provide an additional aid of ₹1.7 billion to Myanmar.