The Finance Minister has presented a comprehensive and wide-ranging Budget for FY19, which addresses most of the areas that need focus to ensure sustainable, long-term and equitable growth of the Indian economy.
The Union Budget needed to be prudent and forward-looking rather than populist and that is exactly what Finance Minister Arun Jaitley has achieved through some very smart schemes announced in the areas of healthcare, Science & Technology (S&T), agriculture and rural infrastructure.
The announcement of National Health Protection Scheme (NHPS) for marginalized and disadvantaged families is going to be transformative for the Indian economy as the Budget correctly notes that "India cannot realize its demographic dividend without its citizens being healthy."
The provision of a health cover of Rs 5 lakhs per family per year for 10 crore poor families through NHPS is a big step towards introducing a much-needed universal health coverage in our country.
It is an ambitious undertaking as it probably would be the largest government-funded healthcare program in the world aiming to provide health insurance to over 50 crore individuals, which is nearly 40% of India's population.
The devil is in the details about how this scheme is going to be financed because that is going to determine the effectiveness of its delivery. I believe it is a cost that we can afford and a cost we must afford to ensure inclusive economic development.
Similarly, the decision to set up 24 new government medical colleges and hospitals by upgrading existing district hospitals in the country is noteworthy. This would ensure that there is at least one medical college for every three parliamentary constituencies and at least one government medical college in each state, which augurs well for overall clinical practice and clinical research in our country.
I believe the use of telemedicine by linking primary health centres with district hospitals can further strengthen the healthcare delivery mechanism in rural and semi urban areas.
Science & Technology
I am also pleased to see the focus on Science and Technology in this Budget. If we are to move the economic needle, we urgently need to raise public spending on R&D, which has stagnated at 0.6%-0.7% of GDP in the last two decades.
It is interesting to note that the latest Economic Survey for the first time included a chapter on the transformative potential of Science & Technology. It called for a doubling of efforts and expenditure in R&D with a mission mode focus on Genomics, Mathematics, Dark Matter, Energy Storage Systems, Cyber Physical Systems and Agriculture.
Acknowledging the immense potential of next-generation technologies in unleashing exponential economic growth, the Budget announced the launch of a Mission on Cyber Physical Systems to support the establishment of centres of excellence, which will invest in research, training and skilling in robotics, Artificial Intelligence, digital manufacturing, Big Data analysis, quantum communication and Internet of Things.
The Budget has rightly doubled the allocation on the Digital India program to enable combination of cyber and physical systems, which have the potential to transform the innovation ecosystem and the economy.
It also said that the NITI Aayog will establish a national program to direct efforts in the area of Artificial Intelligence towards national development.
In institutions of higher learning and research centres, lack of state-of-the-art laboratory equipment can have a disastrous effect on the quality of research conducted. Funding is a critical factor that can decide the course of science. Better allocation of resources can improve the quality of science education in our schools, colleges and universities.
In this regard, the FM's proposal to launch a major initiative named Revitalising Infrastructure and Systems in Education (RISE) by 2022 with a total investment of Rs 100,000 crore in the next four years is a step in the right direction. This will lead to higher investments in research and related infrastructure in premier educational institutions, including health institutions.
I particularly welcome the proposed launch of the Prime Minister's Research Fellows (PMRF) Scheme, which offer fellowships to 1,000 best B.Tech students each year from premier institutions and provide them facilities to do Ph.D in IITs and IISc.
The Budget also takes note of the fact that there is severe agrarian stress and has rolled out a slew of measures to address it.
The announcement of a higher MSP for farmers along with the launch of Operation Green will boost farm produce leaving more money in the hands of farmers, which will hopefully lead to higher rural consumption.
The Budget also unveiled a massive spending of Rs 14.34 lakh crore on rural infrastructure, for the construction of roads, new houses, toilets, and providing electricity connections to 1.75 crore new households.
The much-awaited corporate tax relief was missing in this year's Budget. At 30%, India probably has the highest rate of corporate taxation in the world. To be globally competitive we need to bring this down to sub-20% levels. This year's Budget brought relief to MSMEs by bringing down the corporate tax rate to 25% for companies with revenue of up to Rs 250 crore. However, this could have been extended to all corporates leading to more investments and job creation.
I believe the introduction of a 10% tax on long term capital gains exceeding Rs 1 lakh will be a deterrent to long-term investment in India as it would disincentivize FIIs and may lead to the outflow of funds from Indian capital markets to more attractive investment destinations.
The Budget also failed to provide any major respite to salaried individuals, thus missing out on the opportunity to boost local consumption.
Overall, it is a good Budget that offers something for everyone. The fact that it is an inclusive Budget reflects that the NITI Aayog was aligned with the finance ministry in the Budget planning exercise.
Through Budget 2018, the government has successfully progressed from its 'ease of business' agenda to 'ease of living' ahead of general elections in 2019.