With measures now announced in the Interim Budget, we can expect an even stronger rebound in investment to keep pace with rising consumption demands both in urban and rural sectors
This is a milestone Budget that lays the foundation for rapid, inclusive, sustained and employment generating growth in the coming years and decades. It caps four years of sustained structural economic reforms by this government that have virtually transformed the nature and pace of economic activities in the country. With measures now announced in the Interim Budget, we can expect an even stronger rebound in investment to keep pace with rising consumption demands both in urban and rural sectors.
Disposable incomes in the urban sectors are set to rise sharply with the income tax rebate announced for those whose taxable incomes are below Rs 5 lakh. This will benefit 30 million taxpayers. With the additional exemptions available for savings and interest payments on housing loans and higher standard deduction limit of Rs 50,000, the middle-class population can now raise their consumption levels.
This will be further buttressed by higher limits for exemption from tax deduction at source for interest income that has been quadrupled from Rs 10,000 to Rs 40,000 per year and for rental incomes from Rs 1.8 lakh to Rs 2.4 lakh along with tax exemption for notional rent from two self-owned properties instead of one as at present. All these measures will directly benefit the urban middle class with benefits accruing immediately.
For the rural economy, the announcement of direct income support of Rs 6,000 per year to small and marginal farmers, owning land equal to or less than 2 hectares will provide much-needed purchasing power to lower segments of the peasantry.
It will also improve sentiments in the banking sector, which was apprehensive of a farm loan waiver announcement as has been done by previous finance ministers and in the three states in which Congress has recently taken office.
Expanding the coverage of interest rate subvention to the animal husbandry and fisheries sectors will also give a real boost to these important segments of agriculture economy. In addition, it is expected that commercial bank credit disbursement to the agriculture sector, which has already reached Rs 11.4 lakh crore by December 2018, will rise to a record level of Rs 13 lakh in 2018-19. The 2% interest rate subvention provided for crop loans implies a benefit of nearly Rs 15,000 crore for farmers. All this together will provide a strong boost to rural economy and see a marked improvement in farmers' welfare.
In addition to the measures announced in the Budget, there are also the measures to improve the marketing eco-system for the farmers by establishing E-NAM of which 525 have already been established across the country. Another 415 are slated to be established in 2019-20. These will liberate the farmers from their bonds to local middlemen and established traders operating in mandis. A total of Rs 60,000 crore worth of agricultural commodity trade has already been transacted through E-NAMs and this is bound to more than double in the coming year. This will significantly contribute to doubling of farmers' incomes by 2022-23.
Rajiv Kumar, Vice-Chairman, NITI Aayog
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 "Rajiv Kumar")
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