By Vageesha Bainwala of EconomyDecoded.com
(An update on the new Indian prime minister, Modi, from the Indian-based blog, Economy Decoded)
Prediction of a below average monsoon, increased crude oil prices due to Iraq crisis, appreciation of dollar against Indian rupee posed an unpleasant effect on economy. And in midst of this Modi had to come up with a “Pro People Good Governance” budget. Has he succeeded?
The much awaited Jaitley’s first budget as Finance Minister signals continuity and taps into areas of change. The government has taken into consideration the nature of problem effecting Indian economy as structural that is the NDA Government aims growth of the economy by changing the structure of the economy. With this in view the budget accords market economy playing a dominant role as compared to socialist one promoted by the UPA government in its 10 years.
The Modi led government has clearly emphasized reliance on market economy, foreign dependence for insurance and defence sectors, more spending power to the states of the nation, creation of jobs using a different approach, fostering a digital India. With foreign investment caps increased to 49% in both insurance and defence along with tax initiatives at sectoral level, the budget depicts the corporate focus of the government. Further the FM has shown keen interest on public expenditure. By giving a push to education sector by allocating Rs. 68,728 crore for creation of 5 new IITs, IIMs, AIIMS, a sports university at Manipur etc. and providing impetus to infrastructure sector with changed policies, the Modi government hopes of reviving economy.
The Modi budget can be easily paralleled with the Gujarat Model at various places. Be it the call for uninterrupted power supply or “rurbanisation” idea. Namo talked about smart cities, theme based tourist centers, rurban centre and many such things inspired from Gujarat budgets in his campaign speeches and Mr. Arun has incorporated them into the Union Budget 2014. Most of the successful projects of the Khakhra- Dhokla state have found their way in the NDA policy framework, paving way for a digitized and emerging India.
The budget has lots in store for the so called ‘neo middle class’. With increased expenditure, smarter infrastructure and boosted construction will be visible in the coming year. Taking cue from the previous policies of last NDA government the present administrators have again focused on the transport sector. Jaitley said that as India is such a vast country proper transport medium is necessary for connecting and ensuring faster travel between geographically distant areas. He further highlighted that this is important for transportation of goods and services to help growth of economy. In this respect huge funds have been allocated for metro projects in Lucknow and Ahemdabad along with proposing Rs 37,880cr for the National Highway Authority of India and state roads.
Increase in taxable income limit from 2 to 2.5 lakhs along with the enhancement of Public Provident Funds saving from 1.1 lakhs to 1.5 lakhs has bought some relief for the aam aadmi. The aspirations of the neo middle class have been tapped by keeping aside 200 cr for credit enhancement facility for young start up entrepreneurs. Along with this the commitment to overhaul the ecosystem by promising sanitation to every household by the 17th general election year is also seen as a step by FM to win over key demographic segments.
The Prime Minister had made sure throughout his campaign to have a special message for the women and youth of the nation. And with the release of the budget he has lived up to the expectations of these segments. Encouraging start ups and promising job prospects have garnered applause from the young people of India. For women there is an increased livelihood opportunity in rural areas with the help of Ajeevika- National Rural Livelihoods Mission providing women SHGs bank loans at 4%. Also the start of crisis management centre in all district hospitals of Delhi and National Capital Territory is a step taken by the NDA government towards better safety of women. The budget also promises toilets and drinking water facilities in all girl schools. Not leaving the senior citizens behind, Jaitley has payed attention to their sentiments as well and has promised revival of the Varishtha Pension Bima Yojana(VBPY) scheme.
Thus the Union Budget is a relief from the monotonous UPA policies from the last 10 years. With various shifts from socialist to market economy, investment led rather than consumption driven and a move towards allocative based economy the NDA budget shows signs of change. In an interview to DD News just after presenting the budget, Mr. Arun Jaitley said that one cannot create a hostile environment and then say reforms must go on. And with this ideology the Union Budget 2014 presented on 10th July tried to give a feel- good feeling to everyone. All we can say is this kind of approach has not yet been tested by any other government yet and if the implementation part is on track then Namo might actually reboot India. With great hopes from Mr. Narendra Modi and his budget being released the citizens of India officially step into a new era, whether for good or bad will be seen in the coming time.
Acche Din actually coming?
*Acche Din=”good day”
Views presented in the article are those of the author and not of Tonight at Dawn.