Budget 2019– Analysis

On 1st February 2019, interim finance minister Piyush Goyal presented the last budget for the Modi Government’s term. While it catered majorly to two stakeholders, the agriculture sector and the middle class most prominently, many of the other financial policies were overlooked because of the hype created around these two aspects. In the past few months, the Modi government has shown a clear interest in appeasing the middle-class masses. This manifested as the reservation bill for the general category poor and in the budget as increasing the directly taxable income to INR 5 lakh as opposed to the previous INR 2.5 lakh.

While there are still speculations about the outcome of these moves, the question remains, did the Modi government make these policies with full cognizance of their impact on the economy or was this budget a campaign for the next elections? In what was probably one of the longest budget speeches, Mr. Piyush Goyal didn’t leave any occasion to take a dig at Congress or to praise Mr. Modi for the incredible things he has done for the Indian masses, taking adequate pauses to campaign for BJP. In the interviews that followed, he was constantly questioned on the nature of the budget and the sentiment with which the government presented it.

In an interview with Economic Times, Mr. Piyush Goyal stated that the government stuck to making an honest budget despite temptations. Highlighting the various development policies that Modi government has undertaken in its 5-year tenure, he claimed that the Prime Minister’s aim has always been development while elections ‘come and go’. All the while, his main focus has been to highlight the provisions for paying pensions to unorganized sector workers and extra monthly income to farmers. Though, a lot has gone unspoken about.

For instance, let us look at the revised FDI norms for the e-commerce sector. As per the new rules, retail giants in which the e-commerce companies have stakes in, can no longer host its products on the platform. This means that e-commerce giants like Amazon and Flipkart will suffer a significant loss in the coming days. If they don’t restructure soon, they will be in violation of the new rules. This also means that retailers like Cloudtail will no longer be able to sell on Amazon, as the e-commerce giant holds an equity share in the retail company. Before this, Cloudtail and Appario retail where major sellers on Amazon. Delisting of products from these retailers on the e-commerce platform will mean that the range of products will be significantly cut down. While, only time will tell the impact of this move, it is speculated that this could cause the big firms to cut down their investments and negatively impact the e-commerce industry in India.

Secondly, technology saw only a minor mention in the budget. Even though the Modi government has time and again championed the cause of Digital India throughout its tenure, no solid plan can be seen to actualize this goal. The government plans to create 1 lakh digital villages across India in the coming years and intends to do this via Common Service Centre (CSC) scheme. However, the systemic problems in terms of financial feasibility and accountability of CSCs have been completely overlooked.

In the healthcare sector, the government has solidified its seriousness towards the Ayushman Bharat scheme that is meant to provide Rs. 5 lakh insurance cover to 10 crore families by funneling another 1500 crore into the scheme. The primary motive of the scheme is to tackle the problem of lack of infrastructure in the healthcare sector by pushing forward the ‘home healthcare’ industry. However, the question remains whether this will lead to any concrete betterment of the healthcare facilities available in the country. This move doesn’t solve the problem of the bad condition of the public healthcare system. Additionally, it requires insurance companies to agree to include home healthcare into insurance covers. Yet, no effective change is promised since the Ayushman Bharat Scheme doesn’t tackle the root cause of the poor state of public healthcare, which is lack of doctors and infrastructure.

In conclusion, while this year’s budget was able to provide some benefits to the middle class, agriculture and the unorganized sector, it has failed to yet again address certain key issues like healthcare and technology. The measures taken by the government in these sectors remain to be tokenistic in nature while the government pats it back for appeasing the populous.

Picture Credit- Youth Incorporated Magazine

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