Home » Budget News » Not a suit boot ki sarkar: Govt silences critics with pro-farmer #Budget2016

Not a suit boot ki sarkar: Govt silences critics with pro-farmer #Budget2016

P Pullarao | Updated on: 14 February 2017, 5:50 IST
If a finance minister had an endless treasury and no spending problems, like the government of Saudi Arabia had a few years ago, then answering every need is easy. In India,every budget was a test of trying to meet the high subsidy bill on fuel,oil and food. This particular burden is less now thanks to the oil bonanza of the last 2 years.

This is Arun Jaitley's third budget and if things go well, he will have two more budgets to present for this government. Jaitley cannot please all. But there are some needs that this budget answered.

The media would be full of articles and commentary dealing with every facet of taxation and investment. It might be better to pick out a few important announcements.

1 .One can be extremely happy that the finance minister has paid attention to costly health interventions needed for poorer sections and middle classes. Jaitley has made a reference to "dialysis" and allotment of funds so that every district hospital in the country can offer free dialysis. Further, Jaitley has also announced health care upto Rs 1 lakh for every senior citizen per year. This is surely not enough. Along with dialysis, Jaitley should have added brain strokes, paralysis and some other costly health conditions. But a beginning was made.

2 . Government is also opening 3000 drug stores to supply medicines at cheap rates. This again helps as it is another health intervention.

3. Amnesty scheme is also much needed. Lot of self-righteous people might say that it is rewarding tax evasion. But just as we go for a heart bypass operation to answer a bad diet, there is no other way out to get black money into the economy. In fact, the amnesty scheme could have been more attractive.

4. Normally, there is a lot of media hoopla when the Income Tax Exemption is raised a little bit. The taxpayer may save a few thousand. But the government takes it away by indirect taxes. Jaitley did not raise the limit.

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Photo: Mohd Zakir/Hindustan Times via Getty Images

5. It was a relief that Jaitley raised Service Tax from 14.5% to 15 %. Still I think Jaitley made a mistake of not having a dual rate for Service Tax or reducing it by a couple of points. But one rarely hears of a finance minister who reduced taxes. Arthur Laffer is an economist who theorised that lower taxes will spur growth and obviously it worked in USA and other countries. But who is Laffer compared to an Indian bureaucrat?

6. There is massive focus and allotment for agriculture and rural development. Never before has there been so much budgetary provision n real terms for agriculture and rural development.The Ministry of Panchayat Raj has been given nearly Rs 2.80 lakh crores to be distributed to each and every Panchayat in the country.This will have a cascading effect on rural consumption and help the economy.

7. There is a big allotment for irrigation. But this could be counter-productive. India has over 60 million tonnes of food grains in storage. The basic problem with Indian agriculture is that we grow too much foodgrains, which are mostly low value crops. Irrigation usually encourages cereals and sugarcane cultivation. We have these crops in surplus. We need pulses, oilseeds, fruit and perhaps floriculture. Irrigation is perhaps not so important for high value crops. So irrigation by itself may not cure the maladies in Indian agriculture. But no one can say that the Modi government did not throw money at it.

8. There is also another allotment which does raise hope for cheaper aviation. India suffers from high cost airports at Delhi, Mumbai, Bangalore, Kochi and Hyderabad. Nearly 70% of all flights either originate or touch these 5 private airports. These private airports charge too much. The government has discovered that there are 106 unused airports and airstrips across the country. Now funds have been allotted to revive them. If done properly, some of these airports will increase air connectivity at cheaper prices.

A course correction

Why did Modi give so much emphasis to rural development, panchayats, agriculture and social welfare schemes? Earlier, Modi used to say that he would try to create wealth rather than stress division of wealth.

Napoleon famously said "Do not interrupt an enemy when he is committing mistakes". What we have seen in the last 18 months is that the Opposition did not give Modi any time to commit mistakes. Whenever Modi committed a mistake, there was an outcry by the Congress and others. Immediately, Modi set about correcting mistakes.

We have seen major criticism that Modi was only worried about "suit-boot" and industry and never cared about rural areas or farmers. The Budget answers these critics and it seems Modi has gained by the constant premature criticism.

Congress and other parties should have allowed Modi to commit mistakes and he was well on the way to doing so irreversibly. But who needs friends when you have enemies like Congress and others? Now Modi has gone totally "desi" and in the process, farmers and rural people will get some much needed relief. If this works, Modi will build a formidable rural constituency At least, he will be immune to criticism that he heads a "suit-boot ki sarkar".

First published: 1 March 2016, 4:53 IST
P Pullarao @catchnews

Dr Pullarao is an economist and public affairs commentator based in Delhi.