The Budget was on expected lines, with an emphasis on agriculture, SMEs and infrastructure. A major announcement of the Budget was on healthcare that will give a firm push to social security. At Rs 5 lakh per family per year to 10 crore families (up to 50 crore beneficiaries), the premium (at 3 per cent) would come to Rs 1.5 lakh crore. So at an expenditure of about 1 per cent of GDP, the corresponding benefits will be huge.
A big focus of the Budget was the farm sector with a huge outlay of Rs 14.34 lakh crore for the rural economy. The focal points range from 150 per cent increase in MSP for crops, tax incentive to FPOs (under Operation Green), boost to food processing sector (42 food parks), agricultural exports, additional Rs 1 lakh crore in institutional credit to farmers as well higher allocation to fisheries and animal husbandries which will give big boost farm incomes. The focus has been to ensure that the farmer's produce reaches the ultimate consumer with minimum of hassles, with maximum realisations for farmers.
Construction sector, lagging for quite a while, will be boosted by the budget. With a quantum jump in allocation to agriculture/ rural sector, almost 10 per cent of GDP is noteworthy, there has been a big emphasis on creating more rural roads, double of last year to 3.17 lakh kilometers, 51 lakh new rural houses, besides almost 2 crore toilets under Swachh Bharat. This will not only give a boost to rural economy, but also create significant employment opportunities.
Besides agriculture, SMEs was the other focus area of the budget. A reduced tax rate of 25 per cent for those with turnover of Rs 250 crore, will benefit almost all. With this only 7,000 out of 7 lakh companies filing returns will remain in 30 per cent slab, although the remaining 1 per cent account for a big chunk of the tax revenue for the government.
No doubt there has been a slippage of 30 basis points in the fiscal deficit target to 3.5 per cent of GDP, entailing an additional spending of Rs 30,000-40,000 crore. But such spending was the need of the hour to bring back the growth momentum in the economy, and it is heartening that the finance minister has taken such a call.
The FM has also duly addressed the current job situation in the country. Besides extending the fixed-term contract hiring to all sectors, the government will also contribute 12 per cent of the wages of the new employees in the Employees Provident Fund (EPF) for all the sectors for the next three years.
The budget announcement of reducing regulatory minimum investment grade for corporate bonds to A rating from current AA is welcome as this would reduce the dependence on bank lending.
The introduction of standard deduction of Rs 40,000 for the salaried class is welcome. But taking out medical exemption and other allowed deductions, the net benefit is about Rs 6,000. But there has been relief in medical insurance and major exemptions for the senior citizens.