Finance Minister Nirmala Sitharaman’s sixth consecutive budget speech was bereft of the fireworks one expects of a budget that comes on the eve of an all-important Lok Sabha election. The FM, as indicated earlier, steered away from announcing any populist measures or sops and focused completely on infrastructure and the economy.
Finance ministers usually choose to display flamboyance in an election year with all-round sops and a please-all budget with a clear mind to leverage votes, but Sitharaman walked the path less taken and displayed modesty and economic wisdom by trying to trim fiscal deficit to 5.1 per cent of GDP.
An interim budget presented a good five years ago by Piyush Goyal offered a tax rebate raising the tax exemption limit to Rs 5 lakh per year that benefited over 30 million taxpayers. There were major sops given to farmers too. The very fact that the Sitharaman did not choose freebies and tax sops to woo voters, which she could have, reflects the seriousness with which she has looked at the budget and the electoral confidence of the BJP government ahead of the polls.
However, the budget had political overtones as Sitharaman smartly navigated through a narrative that was focused on “enormous challenges” faced by Prime Minister Narendra Modi right from the time he assumed office, a crippled past and now the revival of the economy. Her narration was peppered with success stories of Modi’s governance as she kept exuding confidence that the party is confident of returning to power with an even bigger mandate.
While Sitharaman presented an economist’s budget that reinforces her belief of the BJP storming back to power, she has strategically brought in a feel-good factor for a vast segment of the electorate through subtle announcements like the one about withdrawing old tax demands. She proposed to withdraw old disputed direct tax demands of up to Rs 25,000 till FY10, and Rs 10,000 for 2010-11 to 2014-15. According to the finance minister, this decision will benefit one crore taxpayers, and that is massive in terms of reach.
Another significant proposal is to solarise the rooftops of one crore households through a provision of Rs 10,000 crore. These households can obtain up to 300 units of free electricity every month resulting in a saving of around Rs 18,000 per month. Again, this becomes a mass outreach.
Above all, the budget’s thrust was an Rs 11.11 lakh crore spending on infrastructure, a sector that is seen as a foundation stone of sustainable growth. Setting up more medical colleges, Blue Economy 2.0 to promote aquaculture, two crore additional houses under Pradhan Mantra Awas Yojana Gramin, tax benefits for pension funds, big push for iconic tourist centres were some of the proposals that propel positivity. The Rs 1 trillion allocation for research and development is path-breaking and is a clear signal that India is betting big on innovation.
Sitharaman, by choosing fiscal prudence over extravagant sops and doing a fine balancing between stability, innovation, fiscal deficit, growth and development proved to the critics that budgets are not about elections and also not about votes. Her acronym GDP ” Governance, Development and Performance says it all. Well done, FM.
