DNA Edit: The day after

A day after Finance Minister Arun Jaitley tabled the Budget in Parliament, hopes and apprehensions were evident in equal measures. Contrary to popular perception, the government was judicious enough to not let the annual fiscal exercise turn into a populist bonanza. Still, the financial markets didn’t respond favourably for a host of reasons. A dampened sentiment owing to long-term capital gains tax on equities investments and worries regarding the Reserve Bank of India’s hawkish stance on inflation led to some bloodbath with benchmark indices tumbling on Friday.

After having reaped a windfall for several months, investors are reluctant to pay a mere 10 per cent tax, that too on profits of more than Rs 1 lakh from stock and equity mutual fund investments held over one year. A close look at the Budget will reveal that the MSP sop to agriculture kicks in only towards the fag end of the financial year. Hence, concerns that the government’s move to raise minimum support prices for crops could lead to higher retail prices and in turn stoke further inflation, though valid, come a tad too early in the day. This has been an inclusive Budget, with incentives for all sections of society, and not just farmers.

The middle-class salaried section’s grouse about not getting a higher tax rebate can be tempered with a slew of measures undertaken by the government: An income of up to Rs 2.9 lakh is now tax-free. Moreover, senior citizens can now enjoy tax exemption on earnings from interest up to Rs 50,000. They can also avail of deductions in health insurance premiums and monetary reprieve in case of hospitalisation. All these lead to savings at the end of the day.

Additionally, government investments in building smart cities and infrastructure must also be factored in. So should be the money allocated for setting up premier medical, engineering and management institutions that would benefit the middle class the most. One tends to forget that the Budget is also an effort at nation-building, and in improving and maintaining the country’s assets. It’s more of an exercise in collective gain than class-based sops. It’s also true that the coming days are very important for the Centre as it should keep a close watch on fiscal deficit and prevent the gulf from widening. The year before general elections can be fraught with uncertainties.

However, farmland distress should occupy centre stage in the current scheme of things. Agriculture and health-care are crying for attention. The following months should be devoted to the well-being of the poorest and the marginal sections of the population, which have been overlooked since Independence. The Modi government knows it’s a tightrope walk, and that juggling various and often conflicting demands from different stakeholders wouldn’t be easy. If the Budget is any indication, in all likelihood the markets will come back to senses after the initial trepidation. At this point, a more credible financial model that works for a vast and diverse country like India is virtually impossible to find.