Finance minister Piyush Goyal will present the Interim Budget for 2019-20 amid heightened expectations that he will announce an income support scheme for distressed farmers who have seen their incomes stagnate because of plunging prices, barely enough to pay for loans and input costs.
The budget, the last before April-May Lok Sabha elections, will be keenly watched for cues about the government’s intent on creating jobs, in the face of a latest set of data showing four-decade high unemployment rates, stirring up political cauldron.
Goyal, standing in for Arun Jaitley who is in the US for health reasons, is widely expected to articulate the need for unwavering focus on fiscal discipline even in a poll-bound year, given the delicate state of public finances.
Analysts expect the government to stick to the fiscal consolidation target, with markets keeping a close eye on the estimates of fiscal deficit — a measure of how much the government borrows to fund its expenses.
With tax revenues expected to fall short by Rs 1.5 lakh crore than budgeted estimates, and disinvestment revenues still far lower than the targeted Rs 80,000 crore, the government may overshoot the 3.3 percent of GDP fiscal deficit target estimated for this year (2018-19).
Most analysts expect Goyal not to fall prey to temptations of poll-bound populist spending, and stay the course on the medium-term fiscal consolidation roadmap that seeks to achieve a fiscal deficit of 3 percent of GDP by 2021.
There are also expectations that Goyal could announce a special fund to help beleaguered homebuyers get deliveries of homes stuck in incomplete realty projects.
The move, if implemented, could be seen as an attempt to signal the government’s seriousness to deal with a problem that has affected a large number of people.
The budget will also likely contain a retail trade policy, defining the rules of the game amid a bitter tug-of-war between transnational e-commerce giants and the local traders.
Domestic retail traders, an electoral constituency seen to be close to the ruling Bharatiya Janata Party (BJP), have been lobbying with the government to level the playing field, accusing e-commerce giants of imperilling their livelihoods by offering deep discounts and exclusive preferential vendor deals.
The NDA government’s last budget comes at a time when the opposition has upped the ante on the government’s inability to create jobs, an issue that will likely snowball into a key political issue in the runup to the polls.
Finance ministers usually avoid making any big changes in income tax rates and slabs during an interim budget. Goyal is likely to stick to this convention, although there is widespread anticipation that he will offer a promissory note to the salaried class, pledging to overhaul tax laws, rejig slabs and rates, giving more money in people’s hands if the BJP returned to power.
Along with the interim budget, which will likely list out details of the Narendra Modi- led government’s social and economic achievements, the finance minister will also present a vote-on-account to enable carrying out regular expenses till a new government assumes office after the elections.
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