From farmers to daily wagers and from middle class to rich, interim budget pleases all
The government has knocked at the doors of 12 crore small farmers, 10 crore workers in the unorganised sector and three crore middle-income earners, with a bag of goodies.
Presenting the last Budget before the general elections, the government announced an assured income for farmers with small landholdings, tax sops for the middle class and pension for workers in the unorganised sector. By scrapping the notional taxation on second house purchase, the sluggish real estate sector is also being given a push.
The tax sops for the middle class are expected to leave an additional income of Rs 3,000 to Rs 10,000 crore in the hands of consumers and that is expected to kick-start a consumer-led growth in the economy.
Wooing the farming community, which has been pressing hard for support to get out of their distressed times, has been one of the main goals of the Interim Budget. Presenting his maiden Budget, Finance Minister Piyush Goyal has proposed a direct annual income support of Rs 6,000 for farmers with landholding of up to 2 hectares, which will come in three equal tranches. Covering 12 crore small and marginal farmers, the programme will entail an expenditure of Rs 75,000 crore a year.
Christened Pradhan Mantri KIsan SAmman Nidhi (PM-KISAN), the programme is being operationalised retrospectively from December 2018 and the first instalment for the period up to March 31 would be paid during the current financial year. In current fiscal, the government will allocate of Rs 20,000 crore for the scheme.
Interest subsidy for short-term credit to farmers has been increased to Rs 18,000 crore from Rs 13,000 crore. The government is also providing an interest subvention of 5 per cent in the event of natural calamity hitting crops, if there is timely repayment. Loans for animal husbandry will also enjoy the interest subvention.
To appease the middle-class voter, Goyal has proposed that individuals with income up to Rs 5 lakh will get a full tax rebate. The limit can go up to Rs 10 lakh if one invests in provident fund and other tax-saving schemes. At present, the income tax rebate is only applicable to individuals aged below 60 who earn an income up to Rs 2.5 lakh. For this tax exemption, the government is giving up a revenue collection of Rs 18,500 crore and is expected to benefit three crore salaried individuals.
The standard deduction limit has also been increased to Rs 50,000 from Rs 40,000. Bank depositors will have no tax deduction at source (TDS) for interest earnings of up to Rs 40,000 on their deposits. This will encourage small savers to come back to the banks.
For the unorganised workers, Goyal has announced a monthly pension of Rs 3,000 per month after the age of 60. The money will be directly transferred to the bank accounts of the beneficiaries.
The Pradhan Mantri Shram-Yogi Maandhan for the unorganised sector workers is aimed at those with a monthly income of up to Rs 15,000. An unorganised sector worker joining the pension scheme at the age of 29 years will have to contribute Rs 100 per month till the age of 60 years. A worker joining the pension yojana at 18 will have to contribute as little as Rs 55 per month.
The rollover of capital tax gains has been allowed from investing into one residential house to that in two, for a taxpayer having capital gains up to Rs 2 crore, which can be exercised once in a lifetime. Small and medium-sized businesses registered under the Goods and Services Tax (GST) will get 2 per cent interest subvention on the loan of Rs 1 crore.
In order to meet these additional expenditures, tax collections will have to rise. For two years, the government's fiscal consolidation path has slipped from the targets in the Budget. For 2018-19, the fiscal deficit target has been revised to 3.4 per cent of GDP, up from the previous estimate of 3.3 per cent. The total revenue receipts for FY19 come around Rs 16.66 lakh crore as against the Budget estimates of Rs 17.26 lakh crore. The government is hoping to be cushioned with an increased tax and excise duty collections in the last quarter of the financial year.
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