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Budget 2019: A Look At Populist Measures Already Announced In 2 Months
After setbacks in state elections, the BJP government was likely to take measures to woo the less well-off section of the country like the farmers, small business owners, among others. According to two opinion polls, as reported by Reuters, BJP could emerge as the party with the largest number of votes but fall short of a majority.
Poll results like these could push the government that is gearing up for upcoming general elections due by May this year to take populist measures in the budget 2019 despite already being at risk of breaching fiscal deficit target.
Here are a few announcements already made by the Modi-led government between December and now that hold the risk of pushing costs to the next government that comes to power.
Small businesses
On 10 January, the finance ministry announced that businesses with annual sales of up to Rs 40 lakh will be exempt from the Goods and Services Tax (GST). This concession was earlier limited to a turnover of up to Rs 20 lakh a year. Applicable from 1 April 2019, it will exempt an additional two million small business from taxes, reducing direct revenue.
Meanwhile, last week's Reuters report said that the government was considering offering free accidental insurance and cheap loans to small businesses.
Further, a ban on discounted sales from e-commerce giants like Amazon and Flipkart of products that they hold equity in, will allow fair competition for small traders and retailers that complained about undercutting. The move, that is favour of small retailers, also comes a little ahead of the elections and is expected to kick in on 1 February.
Farmers
After a hint from FM Arun Jaitley, direct fund transfers and interest-free loans are expected to be considered for farmers in the upcoming budget. These loans from state-owned banks that will be compensated by the government is expected to cost Rs 12,000 crore a year, a Reuters report said. The farm loan waiver would be the least preferred option it pointed out.
As for onion cultivators, an important segment in the agricultural sector, their export incentives were doubled to 10 percent in December 2018 after the prices of this key food staple dropped. The programme offers credit to pay taxes.
Reservation
Already adopted by some state governments, the 10 percent reservation in central government jobs and educational institutions for the economically backward population was promised in the recent past.
Common man
Credit Linked Subsidy Scheme for the Middle Income Group (CLSS for MIG) announced by Prime Minister Narendra Modi on 31 December 2016 and earlier extended twice till March 2019 was once again extended in the last week of December 2018 to March 2020.
This interest subsidy scheme is for the first time to urban home buyers whose annual income ranges between Rs 6 lakh and Rs 18 lakh. Land being the biggest challenge in the implementation of the scheme (due to its shortage in city areas), the development of this scheme is being prevented. Additionally, the RBI regulations do not allow banks to fund purchase of land.
Further, GST cuts were made on over 20 items ranging from television to movie tickets in December 2018 that brought cheer to the general public. The government is also planning to raise the ceiling for payment of personal tax the report said, however, such major changes are highly unlikely in an interim budget as it requires the passing of a finance bill.
