Election Budget? Well, Not Really

THE MORNING NEWSPAPERS after the Union Budget had conflicting headlines; “Budget sops to farmers are too little and too late” and “Budget sops will breach the fiscal target; where is the money?”.

- Ajay Shriram

Budget making is always a balancing act, whether it is for a nation or for the house maker who tries to please all members of the family. With just few months to go prior to general elections for Lok Sabha, the interim Budget was effort to address the critical pain points as well as woo a large chunk of electorate – middle class, farmers, rural poor and unorganised sector workers.

The big picture is, that the Indian economy is being recognised as a bright spot in a weakening global outlook. We are now the third largest economy in the world in PPP (purchasing power parity) terms and on the cusp of becoming the fifth largest in nominal terms. There has been macro-economic stability in terms of low inflation, a declining fiscal deficit, a manageable current account deficit of 2.5 per cent of GDP, and record FDI inflows. In this context, some of the highlights of the 2019-20 interim Budget are as follows.

The expectation of a big announcement for rural India was high; and the budget did not disappoint. The big ticket announcement of providing an assured income support to the small and marginal farmers, under the Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) is truly historic. It will have three major effects immediately. First, it will provide relief from the distress on account of low prices; second, such a transfer leaves the choice of how to use the money to the farmer; and third, an unintended benefit would be that all land records will get fully streamlined once in for all.