Arun Jaitley's 2017 Union Budget was presented just days ahead of assembly elections in 5 states.
Highlights
- Budget comes just just ahead of key elections in five states
- It sought to ease pain of notes ban, gave tax breaks to the middle class
- Also reached out to farmers, poor with special schemes
in his Union Budget 2017 pledged to hike government spending on the rural poor and cut taxes on Wednesday, seeking to ease the pain of the notes ban in what he called it a "budget for the poor". He promised to double the income of farmers in the next five years and also to bring 10 million households out of poverty by 2019, seeking to reassure people that the slowdown of the economy caused by demonetisation would not spill over to the next year.
The Finance Minister promised more affordable housing for the poor,
halved the basic rate of income tax to 5 per cent and cut taxes on small firms which make up 96 per cent of India's businesses, imposing an income-tax surcharge on those who earn more to offset the losses.
Prime Minister Narendra Modi's ban on 500 and 1,000-rupee notes, announced on November 8 with an aim to uproot corruption and black money, took out 86 per cent of the cash in circulation at the time. It resulted in a currency crunch that was seen to hit farmers, the rural poor and small traders the most.
Arun Jaitley's Budget included special concessions for small businesses.
Analysts said the Budget was in line with expectations that the government would target communities worst hit by the notes ban. But with elections beginning soon in five states, including in the crucial Uttar Pradesh, Mr Jaitley was expected to splurge on freebies which did not happen.
The Budget was presented only three days before polling is held in Goa and Punjab, much to the chagrin of opposition parties who had alleged that the government advanced the Budget by a whole month only to be able to offer sops to voters. After it was presented, however, no major rival party called it an election budget, though they criticised it as presenting no vision.
Congress leader and former union minister Anand Sharma said the budget "misleading and directionless" and alleged that the government had shifted it to avoid presenting the "ill-effects of demonetisation."
"I call this budget misleading because it is based on the data of just six months. The data from the third fiscal quarter, where the ill-effects of demonetisation will be visible, is not included in it...The budget, and all the rosy figures the Finance Minister is showing, is based on data prior to November 8, when demonetisation was announced. The estimates and projections are thus wrong," Mr Sharma said.
In his speech, Arun Jaitley defended demonetisation, saying it would increase revenues by forcing people to declare untaxed wealth, but conceded that it had hit the economy. On Tuesday the government lowered its growth forecast for the year ending in March 2017 to 7.1 per cent, down from 7.6 per cent in the previous year.
The ruling BJP says its recent gains in by-elections and civic polls are a signal that the people support PM Modi on the notes ban, despite the inconvenience that it has caused them. Opposition parties however allege that demonetisation has been a disaster, punishing the poor instead the corrupt, and have made it one of their main election agendas in the coming elections.
For the first time, the annual budget included expenditure on railways. (AFP)
The battle for Uttar Pradesh, India's most populous state, is not only seen as a semi-final before national elections in 2019, but also offers parties the chance to win more Rajya Sabha seats, since most members of the upper house of Parliament are indirectly elected by state legislatures.
With inputs from Reuters and AFP