The third Budget presented by the finance minister Arun Jaitley has come with a pro-rural tilt. There has been a distinct attempt to address the prevailing agrarian distress across the country. In recent years, swathes of the rural India have witnessed conspicuous rise in farmer suicides as a result of the repeated crop failure. The consecutive bad monsoons have wreaked havoc in the rural economy. Fluctuating produce and the unrepaid loans have created a depressing situation. So, addressing the challenges in agrarian sector was as much an economic necessity as an urgent political need. Congress Vice President Rahul Gandhi has branded the BJP Government as suit-boot ki sarkar, because of its closeness to the corporate houses. So, the accent on rural India in the budget is an attempt to blunt the criticism from the Opposition. Jaitley has proposed to bring 28.5 lakh hectares under irrigation and fast-track 89 irrigation projects, requiring Rs 86,500 crore in five years. The measures, Jaitley has promised will double farmers’ income by 2022. The budget has a staggering Rs 9 lakh crore as agricultural credit in 2016-17. The finance minister has also promised Rs 2.87 lakh crore as grant-in-aid to gram panchayats and municipalities. In actual terms, this translates into Rs 81 lakh per gram panchayat and over Rs 21 crore per municipality. The allocation for rural roads has been increased to Rs 19,000 crore and the crop insurance allocation has been enhanced to Rs 5,500 crore.
However, the urban middle and the upper class have been saddled with taxes. To the horror of the salaried class, the Employees Provident Fund has been made taxable on withdrawal. This has soured the retirement dreams of a significant section of Indias salaried work force. At present, social security schemes run by retirement fund body EPFO are tax free. That means deposits, accrual of interest and withdrawals are tax free under the scheme. Similarly, cars, SUVs, air travel, movies and eating out which are part and parcel of urban life have been made expensive. There is also 10 per cent tax on dividends earned for Rs 10 lakh, again something that is going to hit the urban investor hard.
In a political environment where dissent is being curbed with a heavy hand and the intolerance against minorities is growing, the budget has provided an opportunity to put focus back on the development. The stress on rural economic empowerment is a positive development and it should lift the prevailing mood of despondence. But without a redeeming change in the political messaging of this government, even the far-reaching economic measures will do little to change the negative image of this government. But if the past almost two years of this government are anything to go by, there is little hope of the situation showing some improvement.
Having said that there is nothing in the budget for Kashmir. Not that it was due but people expected the government to offer some more development funds to J&K to placate PDP which has sought some CBMs for the state to resume its alliance with BJP. No fresh allocation for J&K is therefore read as a signal that BJP is in no mood to do the bidding of PDP to save the alliance, not even when it comes to the harmless economic measures. This yet again underlines the lack of seriousness of the BJP to implement the political commitments in the Agenda for Alliance. Once again, time for PDP to rethink its premises on a coalition with BJP.
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