oppn parties Union Budget: Neither Here, Nor There

News Snippets

  • EMI's set to rise after the RBI hikes key policy rate
  • Calcutta HC says that the right to privacy does not end with the death of a person
  • Supreme Court says that a delayed order of preventive detention makes it invalid
  • Shashi Tharoor posts an erronous map of India in his manifesto, rectifies the error after criticism
  • Sonia Gandhi to take a call on who will be Rajasthan chief minister
  • Mallikarujun Kharge to be the new candidate to oppose Shashi Tharoor in the Congress presidential elections
  • RBI says that the September inflation rate may be higher than 7%
  • RBI hikes key rates by 50bps, downwardly revises FY23 growth rate to 7% from 7.2% earlier
  • Stocks recover well on Friday: Sensex gains 1016 points to0 57426 and Nifty 276 points to 17094
  • Mirabai Chanu wins gold easily at the National Games
  • In a first, the Supreme Court recognizes marital rape, although for the limited purpose of allowing married women the right of abortion up to 24 weeks if they conceived as a result of forced sex by their husbands
  • Air India cuts discounts on base fare to students and senior citizens from 50% to 25%
  • Mallikarjun Kharge and Digvijay Singh are being touted as frontrunners to take on Shashi Tharoor in the elections for the post of Congress president
  • Sonia Gandhi will decide who will be Rajasthan CM if she feels there is a need to change guard after the near-rebellion by MLAs in the state
  • Ashok Gehlot bowed out of the race for being Congress president after meeting Sonia Gandhi
RBI hikes key rates by 50bps, stocks jump and recover 50% of the losses incurred in the last few session
oppn parties
Union Budget: Neither Here, Nor There

By Sunil Garodia
First publised on 2018-02-02 19:56:37

About the Author

Sunil Garodia Editor-in-Chief of indiacommentary.com. Current Affairs analyst and political commentator.
As expected, the union Budget this year was a political statement but a bad one. The BJP forgot that the middle class has always been its staunchest supporter. Yet, the budget completely ignored it. Apart from that, the government has failed to spell out how it is going to finance the grandiose schemes it has announced in the budget. Hoping for tax collections to improve and more people to come under the tax net and hoping to finance the welfare schemes from that money is hoping too much.

On paper, the budget will give the necessary push needed to the economy. Massive investments are envisaged in the infrastructure sector. If all of them fructify, hundreds of thousands of jobs will be created and companies that provide materials to this sector, viz. cement, steel, pipes, bricks etc will see booming business. But all this can only happen if the finance minister can raise additional funds. Where is the money?

The health insurance scheme announced for 10 crore families (or 50 crore people, assuming 5 members per family) is truly majestic in its sweep. It will easily be the worldÂ’s most comprehensive government-funded health care scheme. Reports suggest that the premium will come to around Rs 1100 per year. That translates to Rs 11000 crore for covering the entire 10 crore families. Again, where is the money? The finance minister was at his ambiguous best when he said that "adequate funds will be provided for smooth implementation of this program." He did not think it fit to say how and when.

The farm sector does get benefits, but again these will happen only if the schemes announced are implemented. Further, there is a huge risk of runaway food inflation if minimum support price is enhanced too much. Instead, the decision to set up integrated marketing centres for farm produce is better. The government must ensure that there are not too many middlemen in the farm supply chain as they are the ones who corner the profits with the farmer not getting his due.

The prime minister had ranted against protectionism at Davos. Yet, in this budget customs duty on more than 100 products has been increased to protect domestic producers. Granted that it will bring in revenue too but setting up trade barriers is not the way to earn revenue.

If the finance minister is able to improve tax collection and finance the schemes, all will be good. But if indulges in financial profligacy and resorts to borrowing throwing fiscal deficit targets to the wind, it will spell doom for the economy in general and the financial services sector in particular. The NDA government has shown exemplary fiscal discipline in its first three years. One hopes that the trend will continue. As The Telegraph daily put it in its sub-headline, this budget tries to appease all but pleases none.