Whether you are a middle-class salaried employee or a small scale businessman, a professional or a farmer, you only had one question in your mind when the interim Finance Minister Mr. Piyush Goyal started presenting the budget on 1 st Feb — how much will I benefit from this budget?
The budget presented in the final year of the term is a golden chance for any ruling party to make big promises, present a populist budget and please the masses. Prime Minister Mr. Modi knows this too well. However, contrary to the popular expectation, there was not much delivered to the salaried person. At least it looked like it. There were no changes in the income tax rates or increase in the tax-exempt income if you were already in 20% or above tax slab. The markets obviously did not cheer.
There are, however, not so obvious benefits that the common people have received this year. Increase in the TDS limit for rent income, gratuity limits, tax-exempt bank interest limit, capital gains tax on housing property etc. are all benefits targeted at the middle class. What this budget has done is to acknowledge that there is a growing affluent class in India. The base income for the new middle class is changing and the way they invest their surplus income is changing too. Providing long-term benefits for the currently popular modes of investment such as housing property, bank deposits etc. is indirectly going to benefit the middle class in a slightly longer run.
If this is not a populist budget, then why is it still a Jumla? Its not because of what happened on 1 st Feb, but few days before the budget was presented. The government re-calibrated the methodology for calculating the GDP numbers to manipulate, sorry, ‘restate’ the nominal GDP figures for 2016 onwards. This increased the nominal GDP for last year by around 50 basis points and agriculture growth from 3.4% to 5.1%- whooping 1.5 times. How does this impact the 2019 budget? The estimated GDP for 2018–19 increased by approximately Rs. 5 lakh crore. Fiscal targets with GDP as the denominator such as fiscal deficits suddenly came in the green zone. We have restated the GDP numbers before but not for a period as small as 2 years, especially before the elections, which caused the members of the National Statistics Commission to resign. Doesn’t it raise an eyebrow?
Modi government is not the first government to use union budget as a tool for influencing the impending elections and it certainly won’t be the last. Jumla or not, the union budget 2019 does impact the common person in lot many ways. The question is- how do you make the most of it?
Written by — Chinmay N. Ingole, Board Infinity Coach
About the Coach — Experienced Team Lead with a demonstrated history of working in the financial services industry. An Master of Business Administration (MBA) focused in CAPITAL MARKETS from NMIMS. Backed by strong academic foundation with focus on continual learning. Proven experience in quick learning and issues management.
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