DNA Edit: Bharat shining, lower middle class smiling - The interim Budget puts BJP firmly back in the poll race

With just a couple of months before the elections, the government had no choice but to deliver a populist Budget that aims to please the farmers and the middle class, two of its biggest constituencies. Having lost three assembly polls in the recent past, the Narendra Modi-led NDA is more cautious than ever. It wants to consolidate its position with the right moves.

This underscores the importance of the rural package in the form of the income support scheme for farmers. Under the Pradhan Mantri Kisan Samman Nidhi, farmers with land holding of two hectares will be provided Rs 6,000 annual support.

The new scheme will be implemented from December 1, 2018, and the amount will be paid in three instalments through direct benefit transfer. It will benefit 12 crore tillers. Also 10 crore labourers stand to benefit from this Budget by way of direct pension bonanza. Widespread rural distress had fuelled farmers’ protests, which, in turn, were directed at the BJP in the Hindi heartland states of Madhya Pradesh, Chhattisgarh and Rajasthan.

The government wants to do more for Bharat as it will be a key to being re-elected. There was a significant boost to rural development by the sanctioning of Rs 19,000 crore for this fiscal. As per the government, construction of rural roads tripled in five years, thus increasing connectivity. In this time of competitive populism, when the Congress has upped the ante with farm loan waivers, the BJP couldn’t be seen lacking in empathy.

When it comes to empathy, the salaried middle class had consistently been passed over. This time, the government took note, and hence individuals with net annual income up to Rs 5 lakh will get full tax rebate under section 87A.

Subsequently, with all the tax-saving options, exemption can go up to Rs 10 lakh. By this measure, more than three crore middle class taxpayers stand to benefit. The two moves put together bring in other benefits. With money in the hands of farmers and the middle class, it gives a big segment of the population more purchasing power. So, one can expect a surge in consumer demand for FMCG and two-wheelers.

The middle class will now be instrumental in giving a boost to affordable housing. As the government has also extended the benefit of tax exemption for developers by one more year, up to 2020 now, realtors would also want to undertake affordable housing projects.

The cash infusion to Railways is another noteworthy aspect. The government has allocated Rs 1.58 lakh crore for the capital expenditure programme of the Railways — the highest ever for the national transporter, in the hope of boosting its flagging revenues.

The allocation is about eight per cent more than last year’s Rs 1.48 lakh crore but the infusion of investment by the Modi government to improve the country’s railway infrastructure makes it around 148 per cent hike in capex since 2014.

Finance Minister Piyush Goyal who also holds the Railways portfolio emphasised that with the Railways increasingly using indigenous technology, “it will help promote ‘Make in India’ further and create jobs”. Well, this is definitely a feel-good budget, where the focus is on the rural and urban poor and the lower middle class. The Mega Pension Yojana, under which Rs 3,000 per month will given to unorganised sector employees, is a mammoth undertaking.

This Budget also focuses on rescuing the rural economy, which had been moribund for a while now. The allocation to MNREGA has been hiked to Rs 60,000 crore for 2019-20. At the end of the day, the markets’ response may have been tepid, but once the dust settles in, the mood is likely to be upbeat. The interim Budget could well be BJP’s masterstroke as it gears up for battle royale.