Source: The Hitavada      Date: 02 Feb 2019 10:00:45

AS EXPECTED Finance Minister Mr. Piyush Goyal has given the direction the Government would like the economy to take after the general elections. Instead of the interim budget or a vote on account for seeking Parliament’s nod for next four months’ expenditure, Mr. Goyal has given the policy direction that the NDA Government would like to take if voted to power again. Presenting the interim budget on Friday, Mr. Goyal has offered sumptuous income tax relief to the middle class by doubling the income tax limit, offering many other tax rebates like relief in interest income, raising of exemption limit, direct transfer of income to farmers, concession in loan interest to farmers, monthly pension for the workers in the unorganised sector. Thus the Finance Minister has taken into account the distress that farming community is undergoing currently. He has also taken care of poor workers in unorganised sector and has put additional income in the hands of the middle class by offering various reliefs in the income tax.

The Opposition of course will dub this exercise of the Finance Minister as being done with an eye on the forthcoming general elections. But there is no denying that these measures were long overdue and were being constantly harped upon by various sections of the society. For instance, the demand for raising the income tax limit and reducing tax burden on the interest income was being voiced especially by those who had only interest income as the sole source of livelihood after retirement. Thus Mr. Goyal has fulfilled a long standing demand from the honest middle class tax payer.

Similarly, the move to offer cash support of Rs. 6000 to farmers, which is expected to benefit 12 crore farmers, though the amount may appear small, will certainly offer some relief to small and marginal farmer. This assured income will be of some help to the otherwise distressed farmer. And so also will the worker in the unorganised sector have some fixed income to fall back upon. Through all these measures the focus is on rural development and ameliorating the sufferings of the masses. These initiatives are also expected to give a boost to demand and thereby help the economy to grow in near terms. This move recognises the first right of the poor on the nation’s resources.

Another major decision that the Government has announced is the enhancement in the budgetary allocation to the defence sector. The Finance Minister has earmarked Rs. 3 lakh crore for the defence sector. That shows the Government’s resolve to upgrade the defence forces to world class level, especially in view of the rising security concerns because of hostile neighbours. In the last four and half years the Government has taken special care to ensure that the defence sector is not starved of funds in its bid to upgrade.

There is no doubt that the NDA Government has been able to bring down the inflation rate from double digit to just 4.6 pc with December 18 registering the lowest of 2.19 pc. This was of course on the back of a normal monsoon and moderate food prices. However, the worrisome part is that the Government has not been able to meet its fiscal deficit target. And given the amount of commitments that the present interim budget has made in offering various sops to sections of the society there is the concern of the fiscal deficit becoming even more worrisome.

The challenge before the Government is to spread wider the net of income sources. The Goods and Services Tax (GST) offers opportunity for better tax compliance and wider spread of tax coverage, simultaneously easing pressure on tax payer of Government surveillance. Even while the Government makes newer commitments and takes up newer projects, its next priority would be to look for sources of revenue generation.