Finance Minister Nirmala Sitharaman, in her maiden budget speech in the Lok Sabha, remarked that her government would be rolling out several schemes in days to come to make life easier for the common people of India. Looking back on numerous budget documents, it has been common rhetoric on the budget day! The nation is used to hearing big promises targeted at industries, economists and international credit agencies, on the B-day. One can agree that ‘Ease of doing business’ is fine, but why is the Finance Minister(FinMin) batting for ‘Ease of Living’, and that too just before presenting her budget proposals? The got more convoluted as the FinMin went on to unravel the budget proposals. The budget spoke of everything from farmers to small traders, from social stock exchange to FPOs, from start-ups to MSMEs, from universal connectivity to water for all, etc. But where were the big bang reform proposals which were expected to initiate bumper raining of jobs and private investment? Nowhere!
The general budget 2019 will be recognized as a bookmark in the economic history of this country as it has turned turtle the western concepts and theories of an economic renaissance. For long the governments have been adopting a top-down approach where the economic well-being of common people used to be invoked through the empowerment of private sector industries by facilitating easy financing, execution of big projects, fuelling consumption, etc. But, FinMin Nirmala Sitharaman steered clear of all these bookish solutions in her budget while trying to boost the economy. However, it is not as if the Finance Ministry woke up in the middle of the night during budget preparation days and wrote the whole story afresh. The roots of this approach of the Finance Minister are embedded in the experience of 5-years of Narendra Modi government’s last term.
Prime Minister Modi, from the very beginning of his first term, stressed upon the projects which were directly related to common people. Be it Swachchh Bharat Abhiyan or Ujjawala Yojna, Deen Dayal Upadhyay Kaushalya Yojna or Skill India program, or even Saubhagya Yojna and numerous such schemes- all were meant to empower the common man. And that is precisely the reason why Modi was calmly meditating in a cave in Kedarnath on the eve of election counting while political pundits and the opposition were busy making predictions and calculations for a hung parliament. This is the context in which the budget needs to be understood and analyzed.
In the Economic Survey, released a day before the Budget by the Chief Economic Advisor Krishnamurthy Subramanian, the government, very clearly stressed on the need of a push for private investments and reiterated that it was an unavoidable precondition to initiate the process of job creation. So, there is no way Nirmala Sitharaman could overlook this preamble. Interestingly what Sitharaman did, was alter the procedure of doing it. Defying the western economic concept of growth, which inevitably works under the aegis of capitalism advocating the theory of percolation, she chose the path of Bharatiya economic philosophy where the wealth and prosperity should flow from down to top.
Budget 2019 stresses on providing jobs through not only big-ticket projects and giant industries but by strengthening the entrepreneurship spirit of young India. It is clear by the 10 vision points laid by the Finance Minister in the very beginning of her budget speech. Building social infrastructure, digital India, pollution-free India, make in India with particular emphasis on MSMEs, Start-ups, water management and river cleaning, blue economy, self-sufficiency and export of food-grains, pulses, oilseeds, fruits and vegetables, healthy society, and ‘jan bhagidari’ are all directly linked to the ordinary citizens of the country.
Setting a target to upgrade 1.25 lakh kilometers of roads connecting villages to rural markets, the FM set aside Rs. 80,250 crore for it. The government had, in its previous year budget, announced to develop and upgrade the then existing 22000 rural haats into Gramin Agricultural Markets (GrAM). These announcements should be seen in tandem with each other as this will benefit the farmers in their quest to market their agri-produce with timely delivery. This is in addition to the goal of increasing farmers’ income, the minister announced setting up 10000 Farmer Producer Organizations (FPOs) in 5 years. One of the basic business activities of the FPOs is to procure crops from their member farmers and sell them collectively. So, upgraded roads will complement these FPOs in achieving their business goals. eNAM is still in the center of the Modi government’s agricultural marketing efforts and FPOs, roads, and digitization in rural areas are certainly going to give it a push.
Along with this, the FinMin announced two-game changer schemes keeping employment generation in rural areas in focus.
‘Scheme of Fund for Upgradation and Regeneration of Traditional Industries’ (SFURTI) envisions setting up 100 new clusters during 2019-20 which should enable 50,000 artisans to join the economic value chain. The focused sectors are Bamboo, Honey, and Khadi clusters.
The second one, Scheme for Promotion of Innovation, Rural Industry and Entrepreneurship’ (ASPIRE) has been consolidated for setting up of Livelihood Business Incubators (LBIs) and Technology Business Incubators (TBIs). The Scheme contemplates to set up 80 Livelihood Business Incubators (LBIs) and 20 Technology Business Incubators (TBIs) in 2019-20 to develop 75,000 skilled entrepreneurs in agro-rural industry sectors.
These schemes have the potential to unleash a chain of job creation avenues. “We will invest widely in agricultural infrastructure. We will support private entrepreneurship in driving value-addition to farmers’ produce from the field and for those from allied activities, like Bamboo and timber from the hedges and for generating renewable energy. Annadata can also be Urjadata”, said Sitharaman. This Urjadata concept hints at soon to be announced ‘solar scheme’, where the farmers can use their farmland for planting solar panels with a guarantee of power buy back from the government.
Finance Minister Nirmala Sitharaman also announced 100% universal connectivity of eligible habitations by the end of the current year. This announcement might not interest big business houses or economists, but one can imagine the tectonic change it will bring about in the lives of target inhabitants.
Enabling Non-Governmental Organisations and bonafide social enterprises to raise fund in a transparent and regulated environment, the Finance Minister proposed a brand new innovative concept of a social stock exchange, which will work under SEBI. This shall empower social workers to work for progressive change in society.
Rail safety has been in continuous focus for Narendra Modi government and we have seen a drastic decrease in rail accidents during the last 5 years. To continue with its endeavor, the FinMin vowed to spend a substantial amount on Railway infrastructure through Public-Private Partnership model. Faster development and completion of tracks, rolling stock manufacturing and delivery of passenger freight services are not only going to benefit the overall socio-economic growth of India but also save lives and provide more affordable means of travel and business to crores of people.
Similarly, a string of announcements was made for Start-ups and Micro, Small and Medium Enterprises(MSMEs) to get them relief from in doing business. Apart from facilitating loan worth Rs.1 crore within 59 minutes and continuing with the Interest Subvention scheme, Finance Minister announced to create a payment platform for MSMEs to enable filing of bills and payment so that the payment process could be simplified and shortened.
For start-ups, the budget proposed several steps as well. Relaxing condition for carrying forward and set-off of losses, resolving ‘angel tax’ issue along with quick redressal of their grievances by taking Central Board of Direct Taxes in the loop also justifying a fair market value of share issued to certain investors up to Category-II Alternative Investment Funds are steps taken in the right direction.For Urban development, the budget proposed to increase thrust on investment on infrastructure including metro and mass rapid transit system.
In nutshell, Finance Minister Nirmala Sitharaman touched all the right chords to strengthen the common individuals and gave the nation a vision of development through the empowerment of ‘aam aadmi’. This was done for the first time by any Finance Minister. That might be a reason why the media and intelligentsia which was used to reading the financial document in a traditional mindset, looked so dazed analyzing it. The truth, certainly, is that the budget 2019 has ushered a new approach of thinking economic development where growth flows from down to top.
(The Writer is a Assistant Vice President with NCDEX. Views are personal)