Perception that government is giving them money is a big thing: Economist Bhanumurthy on the budget

02 February 2019
Courtesy N R Bhanumurthy
Courtesy N R Bhanumurthy

The Narendra Modi-led government’s last budget before the upcoming Lok Sabha elections is aimed at appeasing struggling farmers and the middle class. On 1 February 2019, Piyush Goyal, the acting finance minister, presented the interim budget—conventionally, at the end of its term, a government presents a vote-on-account, or interim budget, to meet the expenditure till the conclusion of the elections. The budget’s major proposals include an assured income-support scheme for farmers, income-tax rebates for the middle class and a pension scheme for the unorganised sector.

The budget announced the Pradhan Mantri Kisan Samman Nidhi scheme, or PM-KISAN, under which owners of cultivable land of upto two hectares will receive Rs 6,000 every year through direct bank transfers. The scheme—budgeted at an annual expenditure of Rs 75,000 crore—will come into effect retrospectively from 1 December 2018 and is expected to reach twelve crore small and marginal farmers.

The budget also introduced a full tax rebate for middle-class taxpayers with an annual income of up to Rs 5 lakh. Goyal extended the National Democratic Alliance’s pitch to the middle class with an additional tax rebate on incomes of up to Rs 6.5 lakh, if the taxpayers “make investments in provident funds, specified savings, insurance etc.”

Tushar Dhara is a reporting fellow with The Caravan. He has previously worked with Bloomberg News, Indian Express and Firstpost and as a mazdoor with the Mazdoor Kisan Shakti Sangathan in Rajasthan.

Keywords: Elections 2019 Budget 2019 Piyush Goyal Narendra Modi BJP Budget Income Tax finance bill farmers pension interim budget