Indian Economy & Policy
A Budget for Bharat and Beyond
Modi Sarkar’s Budget2.0 was truly a budget for the people of Bharat. In recent times, it has become trendy to distinguish between India and Bharat, with the former referring to the largely urban citizens of the country who have global exposure and access to resources while the latter denotes those in the villages and small towns.. Even the finance minister declared, “At the Centre of everything that we do, we keep gaon, garib aur kisan.” Another interesting aspect of the budget is its use of digital technologies to facilitate its intentions.
Mission Affordable Housing
Taking up the basic needs of Food and Shelter, the government assured that it intended to carry on with its mission of Housing for All by 2022. Under the Pradhan MantriAwasYojana–Gramin (PMAY-G), a total of 1.54 crore ruralhomes were completed during the last five years and accelerating the pace, during 2019-20 to 2021-22, an additional 1.95 crore houses were proposed to be provided to the eligible beneficiaries. Interestingly, unlike schemes before it, the PMAY uses statistics from the Socio Economic and Caste Census (SECC) which offer more information, such as details of homes, including the state of walls and roofs. This enables the scheme to target not only those without houses but those with sub-standard living accommodation as well. Additionally, the targeted houses are also being provided with amenities like toilets, electricity and LPG connections.Interestingly, withthe use of technology, the Direct Benefits Transfers platform and technology inputs, average number of days for completion of houses was reduced from 314 days in 2015-16 to 114 days in 2017-18.
Even in the tax proposals, there was a definite attempt to incentivising affordable housing by offering a tax break on interest paid on housing loans. From the current deduction allowed to the extent of Rs. 2 lakh in respect of self-occupied property, an additional Rs. 1.5 lakh was proposed as deduction for interest paid onloans borrowed up to 31st March, 2020 for purchase of an affordablehouses valued at up to 45 lakh. With this total interest deduction of up to 3.5 lakh, a benefit of around 7 lakh can be expected to accrue to middleclass home-buyers over a loan period of 15 years. At 15.5% of the total loan value, this would effectively make the housing loans interest free.
Stimulating enterprise for growth
The finance minister mentioned start-ups 18 times during her speech, which took an hour and a half to deliver and the term MSME very often as well. So, quite clearly, promoting entrepreneurs – both young and growing - was a priority. In addition to the broader stated emphasis on MSMEs and Start-ups in the Make in India vision for the decade, there were concrete proposals to stimulate growth through encourage start-ups by releasing entrepreneurial spirits. Adequate and timely finance, being a leading concern for smaller enterprises, Government hasintroduced loans of upto Rs 1 crore for MSMEs within 59 minutes, through a dedicated online portal. Further, to encourage these units to enter the mainstream, Rs 350 crore has been allocated for FY 2019-20 for 2% interestsubvention for all GST registered MSMEs, on fresh or incremental loans. There were other proposals to streamline payments to MSMEs as well as merchants and start-ups including non-scrutiny of those who file requisite declarations. Some relaxations were also proposedwith respect to carry forwardand set off of losses in the case of start-ups. Theperiod of exemption of capital gains arising from sale of residential housefor investment in start-ups up was also extended to 31.3.2021. The Finance Minister also sought to inculcate digital transactions amongst merchants.
Advancement of Agriculture
The government intends to invest widely in agricultural infrastructure, supporting private entrepreneurships in driving value-addition to farmers’ producefrom the field and for those from allied activities. It also promised to work with State Governments to allowfarmers to benefit from e-NAM and assure that farmers get a fairprice for their produce and to form 10,000 new Farmer Producer Organizations,to ensure economies of scale for farmers over the next five years. At a broader level, the finance minister acknowledged that as majority of people still live in villages anddepend on agriculture and traditional industries, the ‘Scheme of Fund for Upgradation and Regeneration of Traditional Industries’ (SFURTI) was proposed. It aims toset up more Common Facility Centres (CFCs) to facilitate cluster based development to make the traditional industries more productive,profitable and capable for generating sustained employmentopportunities.
Keeping in mind our mission to finance progress and become an impact financer to those who have hitherto been financially marginalised, we salute the budget. Setting the pace for the months, perhaps years, ahead, this budget may not have been path-breaking but is certainly displaying a roadmap and paves the way for Bharat to walk alongside India.