In Modi govt’s election year Budget, farmers get cash dole, middle class tax rebate

New Delhi: With just a couple of months to go for the Lok Sabha elections, the interim Budget 2019, presented by Finance Minister Piyush Goyal, focused on the middle class, farmers and the unorganised sector, whose disenchantment is believed to be behind the BJP’s recent poll drubbing in the three Hindi heartland states.
Proposing tax sops for the middle class, Goyal announced income tax exemption limit to Rs 5 lakh and a Rs 6,000 annual direct cash transfer for farmers owning land less than two hectares (5 acres), a scheme that will cost the exchequer Rs 75,000 crore per year.
The leader of Congress in Lok Sabha, Mallikarjun Kharge termed the Budget BJP’s “election manifesto” and accused the Narendra Modi government of bribing voters ahead of the Lok Sabha polls.
PM Modi said the interim budget touches all sections of the society and includes everyone. He said it is a merely a “trailer” of what will guide India towards prosperity after the Lok Sabha polls. Congress president Rahul Gandhi, on the other hand, castigated the Modi-led government over its scheme for farmers.
“5 years of your incompetence and arrogance has destroyed the lives of our farmers. Giving them Rs. 17 a day is an insult to everything they stand and work for,” the Congress chief tweeted with hastag #AakhriJumlaBudget.
The move to double the tax exemption limit to Rs 5 lakh from the next fiscal will allow over three crore salaried class, pensioners, self-employed and small businesses to save Rs 18,500 crore in income tax annually. Besides, those who save more can effectively push this rebate up to an income of Rs 6.5 lakh.
“Individual taxpayers having taxable annual income up to Rs 5 lakh will get a full tax rebate and therefore will not be required to pay any income tax. As a result, even persons having gross income up to Rs 6.50 lakh may not be required to pay any income tax if they make investments in provident funds, specified savings, insurance etc,” Goyal said in his Budget speech, spanning over one-and-a-half hours.
Since this is a rebate and not a slab change, it will not impact the tax incidence of those with larger incomes though it will have some impact for those whose salaries are under Rs 10 lakh as they can add home loans and tuition fees to get additional benefits.
Under the scheme, 12 crore small and marginal farmers owning less than 2 hectares will be provided Rs 6,000 in their bank accounts in three installments in a year. Saying that the scheme would not only provide an assured income for the farmers but would also cover emergency costs during harvest season, Goyal said PMKSN would be implemented from the current fiscal at a cost of Rs 20,000 crore.
The finance minister also announced a two per cent interest subvention for farmers hit by natural calamities, while offering three per cent more to them for timely loan payment. However, the farm income support scheme will result in the government breaching its 3.3 per cent fiscal deficit target from the current year.
Targetting the informal sector, which was incensed with the government over low wages and poor work conditions and carried out a two-day nationwide strike on January 8-9, Goyal announced a pension scheme for the workers, called the Pradhan Mantri Shram Yogi Mandhan.
Under the scheme, an assured monthly pension of Rs 3,000 will be provided to workers in the unorganised sector after 60 years of age. However, to avail of the scheme, workers will have to contribute Rs 100 per month.
“The scheme, which will benefit 10 crore workers, will be implemented from this fiscal itself. It may become the world’s biggest pension scheme for the unorganised sector in five years,” he said. Goyal also announced an increase of gratuity limit from Rs 10 lakh to Rs 30 lakh from the next fiscal.
The Budget also saw a hike in allocations for Railways and defence. While a capital expenditure of Rs 1.58 lakh crore has been allocated for the Railways, the highest ever for the national transporter, the defence budget has been increased to over Rs 3 lakh crore in 2019-20.
“Vande Bharat Express, indigenously developed semi-high speed train, will give Indian passengers world-class experience. This major leap in wholly developed technology by our engineers will give an impetus to the Make in India programme and create jobs,” he said.