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Union Budget
Union Budget 2016: oppositions' criticism is without any homework
As soon as Arun Jaitley presented the Union Budget of 2016, the commentary of political parties followed as per their fixed lines. BJP and NDA parties hailed the budget as one of the historic budgets focusing on farmer and rural sector; opposition parties termed it as the worst budget having no vision at all.

From media too the budget was termed differently. Some said it's a UPA-III budget, some said it's a political budget focusing on votes from farmers and rural population for the upcoming seven state elections, while some were of the opinion that Modi government's budget is aimed to blunt the 'suit-boot ki sarkar' tag. But many neutral experts rated the budget as good, futuristic and cautious.

JDU spokesperson Pawan Verma said that this budget had nothing for farmers, youth, middle class and the corporate sector. According to him the budget was just jugglery of words and there was no vision at all to address to any sector. My analysis is below to counter his views. I will not provide the data which will lengthen the article. Data in any case is available online for everybody's dereference.

Is the budget really pro-farmer?

Nobody can question the fact that this budget has allocated a lion's share to the farm sector. The focus is enhancing the farm related infrastructure building. Be it irrigation, ground water development, road connectivity, electrification, soil health card or crop insurance, the focus is to equip the farm sector for better productivity. Some questioned the Finance Minister Arun Jaitley's claim to double the income of farmers in coming five years. I don't know whether that is possible or not, but it's definitely a statement of intent. If the government remains dedicated to its intent, I don't think anything is impossible as growth always follows a hyperbolic path. Initially the growth may not be visible, but as time passes the growth rate becomes bigger and bigger.

Some have asked whether this is sufficient for the highly distressed farm sector and shouldn't the government have declared a bailout package like waiver of farm loans? Why there is no increase in MSP? Now to answer on the question of sufficiency, I can say no amount can be sufficient for distressed farm sector that has been ignored historically. There is at least a beginning to focus on this sector. Farm loans have been waived several times in earlier budgets, but that never solved the issue.

Increasing MSP could be a good measure but again, how it will help when the sector is suffering from continuous drought for two years? The government should increase MSP if there is a distress sale. This is not the present condition. On the other hand the expenditures proposed this time will definitely benefit the farm sector in the long term. I feel the government has done a good job by not focusing on populist measures for immediate political gains, rather it appears to be committed to bail out the sector in the long term.

Has the middle class been ignored?

The Indian middle class is always looking for increase in income tax slabs, as majority of this class are salaried individuals. There has been no increase in income tax slabs except some minor benefits to the people having annual income of Rs 5.0 lakh or less. There has been a 0.5 per cent increase in service tax and 60 per cent on EPF withdrawal made taxable. Media has highlighted this as betrayal of the middle class. Is it so?

Because there are limited job opportunities and no growth in any sector, two things have happened. The unemployment numbers have increased and the employed people either got no increments or very low increments. Had the government increased income tax slab, the middle class would have benefited with some amount in a year, but the government's revenue would have decreased, and so the expenditure. So what is beneficial to the middle class? Isn't it a fact that increased government spending creates jobs and opens up opportunities, particularly when there is no private investment?

If job sector booms, won't the salaried class benefit through significant increments with amounts more than the tax savings in an increased income tax slab? Thus, the budget is also pro-middle class as the increased government expenditure will increase remunerations for them apart from providing jobs to jobless people.

50 paise increase in luxurious spending of Rs 100 is not going to hurt anyone, hence the 0.5 per cent increase in service tax is nominal. Regarding EPF, the government claims that it is intended to bring parity in different pension schemes. Anyways this tax is intended for high income groups. The earlier method of EEE (Exempt, Exempt, Exempt) is now made EET (Exempt, Exempt, Tax). Which means twice this amount is exempted, where as once it is taxed. Anyway I hope in closer scrutiny the government may reconsider this as it contributes very little revenue and may take a toll on political credibility.

Has the corporate sector been ignored?

Those who blamed the Modi government as pro-corporate, even criticized this budget as anti-corporate. They have been taxed more and no significant incentives to attract investment have been provided in the budget. The UPA government had given Rs 3.0 lakh crore bailout package to corporate sector during its tenure. But did any private investment come? The answer is no. Does the corporate sector want such a bailout package? Rahul Bajaj describes it well that the corporate sector doesn't need any bailout from the government and neither it's worried about the increase in taxation. The corporate sector will do investment only when there is demand. 

Demand can be increased only if the purchase-ability of consumers increases. This purchase capacity will increase if there are more jobs and more income. Increased government spending in any sector will make that possible. Government spending in farm and rural sector will increase income of sizable population, which will create demand, motivating corporates to increasing investments in manufacturing sector. That means that the government's focus on farm and rural sector will also help the corporate sector.

So isn't it time for Pawan Verma to do some homework before criticizing the budget, being biased politically?

Editorial NOTE: This article is categorized under Opinion Section. The views expressed in this article are solely those of the author and do not necessarily represent the views of merinews.com. In case you have a opposing view, please click here to share the same in the comments section.
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