India’s expansionary Budget looks at multi-sector growth

Agriculture gets major boost in Indian Budget for 2018;

Corporate tax rate cut, personal income tax untouched

The Wire (India)

Finance minister Arun Jaitley loosened his government’s fiscal deficit targets for the new financial year, partly as a result of unsure tax revenue and partly to step up public spending, while presenting a budget (in Parliament on Thursday, February 1, 2018) that appeared to focus heavily on the agriculture and health sectors.

While the fiscal deficit for 2017-2018 has gone up to 3.5% of GDP from the earlier target of 3.2% the NK Singh Committee recommendations for the target for 2018-2019 of 3.3% have been accepted.

Health Protection Programme

The announcements include a revamped national health protection programme that will provide coverage of “up to 5 lakh rupees per family per year for secondary and tertiary care hospitalisation” for 10 crore families and a promise to provide minimum support price (MSP) “for all unannounced crops of kharif at least at one and half times of their production cost.”

Mr Jaitley said, “Four years ago, we pledged to give an honest, lean and transparent government. We have decisively reversed our ‘Fragile Five’ tag.’ Indian economy is now a $2.5 trillion economy and seventh largest in the world.”

Promise and Performance

Mr Jaitley also listed the promises the Narendra Modi government has made in the last four years, and how the government has achieved them. He said this year’s Budget will focus on agriculture, rural economy, health and infrastructure to increase the ‘ease of living’ for India’s poor and middle classes.

The Finance Minister presented the Budget using both English and Hindi.

The following were the key takeaways:

Fiscal deficit target: The Modi government has allowed for some fiscal slippage. 3.5% for 2017-18 (target was 3.2%) and 3.3% for 2018-2019 (target was 3%).

Agriculture spending: Increase in credit targets, new ‘Operation Green,’ 1.5% times MSP for kharif crops, new policies that will address procurement, demand and forecast.

Health coverage: Many new schemes announced, one of which is a health protection initiative that the Modi government boasts is the “largest government-funded programme” in the world.

India Inc: Corporate income tax rates reduced for Micro, Small and Medium Enterprises (MSMEs) that have Rs 250 crore. Mr Jaitley partially takes another step towards fulfilling his promise of reducing rates for all companies by 2019.

Agricultural sector

“My government is committed to the welfare of farmers… My Prime Minister gave the clarion call to double farmers’ incomes by 2022. We consider agriculture to be an enterprise and want farmers to produce more on the same land and also get better returns from their produce,” Mr Jaitley said.

The minimum support price for kharif crops will be set at 1.5 times the cost of production, he  said and announced that institutional mechanisms to develop appropriate policies for prices, demand forecast, use of future/options market, expansion of warehouse system, and specific measures for export as well, will be worked out.

Operation Green

The Finance Minister said that the government will now launch ‘Operation Green’, which will promote farmer producer organisations and agri-logistics associations.

“I propose to allocate Rs 500 crore for this purpose. The target for agricultural credit is set at Rs 11 lakh crore – up from Rs 10 lakh crore last year,” he said.

Operation Green- tax sops for farmer production companies will allow 100% deduction to these companies registered as farmer producer companies having Rs 100 crore as turnover irrespective of profit.

Health

Mr Jaitley announced the ‘Ayushman Bharat’ scheme, saying that “India cannot realise demographic dividend without its citizens being healthy.” He called it the “largest government-funded health programme.”

Under Ayushman Bharat health programme, “we will avert wage loss and impoverishment.” Mr Jaitley claimed that these schemes will also create jobs for women.

“This is part of moving towards universal health coverage. Ten crore poor families will be covered by the new national health programme. Rs 600 crore is being allocated to provide nutritional support for all tuberculosis patients.”

The above article is a highly edited version of the original appeared in The Wire, (thewire.in) Web Edition on February 1, 2018. It has been reproduced here with the permission of Siddharth Varadarajan, one of its Founding Editors.

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