Small servings, many plates

• Presenting her seventh Union Budget and the first after this year’s Lok Sabha election, Finance Minister unveiled a flurry of measures aimed at fixing the woes of unemployed youth, small businesses, and the middle class, and sought to strengthen the ruling

Highlights:

• FM proposed income tax rate cuts worth up to ₹17,500 a year, putting an extra ₹1,458 a month in the hands of these taxpayers, and hiked standard deductions for salaried taxpayers and pensioners by ₹25,000 and ₹10,000.
• She also vowed to spend ₹2 lakh crore over five years on five schemes which are part of what she called “the Prime Minister’s package”, aimed at spurring jobs and imparting skills to 4.1 crore youth.
• This marked a shift in strategy, or rather a frenetic changing of lanes ahead of a roundabout as drivers in the capital are prone to do, from the previous government’s preferred reliance on letting multiplier and trickle-down effects work while avoiding direct handouts to such sections of society.

Trigger for shift

• At a briefing after her roughly 90-minute speech, which appeared to acknowledge and begin addressing the perceived disenchantment among specific voter groups like the young, the salaried class, farmers, and small entrepreneurs, Ms. Sitharaman made it clear that the overarching theme of Budget was ‘EMPLOYMENT’.
• Used as an acronym, the theme was spelt out - Employment and Education; Micro, Small and Medium Enterprises (MSMEs); Productivity; Land; Opportunities; Youth; Middle Class; Energy Security; New Generation Reforms; and Technology.
• The Finance Minister did provide some indirect support to private investments by accelerating the fiscal consolidation process, armed with a ₹2.1 lakh crore surprise dividend from the central bank.
• The fiscal deficit target for this year has been pegged at 4.9% of GDP from the 5.1% projected in the Interim Budget, and the 5.6% of GDP achieved last year. A reduction in the government’s market borrowings would facilitate a reduction in policy interest rates and encourage private investment.
• Among the PM’s employment package schemes is a plan to provide one year internships in 500 top companies to one crore youth over five years. It is not clear if this will subsume the Pradhan Mantri Kaushal Vikas Yojana 4.0 that was announced in the last Budget to “skill lakhs of youth within the next three years” with an on-the-job training component.
• As is the case with many initiatives of this Budget, more details will emerge over time. But, Ms. Sitharaman will be hoping that the lens change reflected in the Budget’s focus areas will not be lost on voters gearing up to cast their ballots in the upcoming State Assembly elections.