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Budget 2016 – BJP/NDA Present First Socialist Budget February 29, 2016

Posted by simarp in : India , add a comment

Unless there are zillions of fine lines in the budget document, this budget is the best which Congress, UPA and other Socialists would have put together in a non-election year. In an election year, they would have definitely gone overboard with Socialistic zeal. It looks like last year’s drubbing and a flat year has left BJP thinking. Sensex remained flat, Rupee depreciated, lots of money was not spent, the promise of Achche Din never happened, and on top of it the tag of ‘Suit Boot Ki Sarkar’ got very closely linked to the way the government functioned. This budget aims at moving away from Suit Boot Ki Sarkar to Kissan aur Gareeb Ki Sarkar. This budget has a clear pro-poor and pro-farmer stance to it, which is very good news for India. Making cars and cigarettes expensive is always good. The benefit which car companies and cigarette companies give to the country is diminished by several times because of the burden it puts on Infrastructure and Health Care.

This budget signals acceptance that hype and dreams require a base which India still does not have. I am not sure whether this budget would contain inflation. My first reaction was that it would actually fuel inflation. Most economists’ early comments say that this is going to reduce inflation and help middle class, I doubt.

It is high time that government looked at Public Sector banks and gave them support,  this budget tries to do that to a considerable extent. For this to work,  it would be important to ensure that the NPAs do not start piling up again for which government must seriously run after entrepreneurs who have defaulted in hundreds of crores but still live lavish life and own assets under dubious companies and names. Government must also penalize and arrest those MDs of Public Sector Banks under whose regime NPAs grew maximum.

Those in opposition, who are claiming this budget to be pro-rich, probably feel that they have nothing else to say.  I don’t see how this budget is pro-rich as it has no such symptoms and it doesn’t apparently favor them any way. It essentially makes everything they love more expensive, whether it is dividend income or eating out in restaurants or buying luxury cars or traveling.

Government’s proposal of taxing black money by 45% and converting it into white is not very attractive because Black money generators, in any case, @35% could have managed to have it white. However, if the government aggressively chases black money then this could be a good proposal.

This budget, if executed properly, would help Bihar, Jharkhand, Chhattisgarh, Madhya Pradesh, UP, Orissa and Rajasthan most and farmers of Punjab, AP & Haryana to a great extent, too.

Two things which surely need some explanation from FM are, why the tribal sub-clans budget has been reduced by half despite planning commission’s stipulation  and why do we not find  any visible nuggets about reducing current account deficit.

Getting every poor to a health cover scheme is a good step and also Rs. 30,000 one-time grant to poor Senior Citizens is a step in the right direction. Jan Aushadhi Yojna or in other words Public Pharmacy Stores are like Fair Price shops for medicines. They would work if they are stocked. Though the number of 3,000 stores looks extremely inadequate but this is a good step in revamping and making Public Distribution System an inclusive affair.

An amount of Rs.15,000 crore has been kept for interest subvention for farmers. It looks to me that it is too little and too late. When farmers were committing suicide, just keeping interest for subvention may not make much difference.

Budget 2016 proposals have brought a degree of optimism in me. However, I remain skeptical as I do not see any landmark proposals in education and skill development sectors.