It’s been a while since the Interim Finance Minister, Mr. Piyush Goyal, announced the Union Budget for 2019. In my previous article, I detailed the impact of this year’s Budget on the common man. In this piece, I will conclude by explaining the effects of the same on rural and corporate India.
Let me begin by first discussing the agricultural proposals made in the Budget.
For starters, Prime Minister Narendra Modi is facing criticism from a majority of Indian citizens on account of low farmer incomes, and high unemployment rate. To solve this issue, the proposal is of a scheme for rural employment and the allocation of Rs. 60,000 Crore under the Mahatma Gandhi National Rural Employment Guarantee Act, i.e. MGNREGA.
The aim is to not allow farmers and unemployed persons to sleep without having food on the table for themselves and for their families. This will further prevent the farmers from being exploited by large corporations buying their produce at lower than market rates; and thus providing the former with a steady flow of income from the Government.
The program, introduced in 2005, is designed to provide up to 100 days of unskilled manual labor in a financial year to every household. Along with this is a Rs. 19,000 Crore budget for the construction of roads in the countryside, where approximately two-thirds of Indians reside. It can be said that the construction will require laborers who will be employed from the rural areas as well, thereby generating employment.
It will also improve transportation and connectivity to other areas and other villages, allowing farmers to sell to a wider consumer base, increasing the possibility of earning more from the same output. One of the most significant proposals in this year’s budget is the announcement of a new scheme, the Pradhan Mantri Kisan Samman (PM Kisan) Scheme, which promises ‘small and marginal farm households’ an assured annual income support of Rs. 6,000, out of the budgeted allocation of Rs. 75,000 Crore.
It can be assumed that this income stream is an attempt by the government to bridge the poverty gap between small farmers. As per the guidelines issued, a small and marginal farm household is defined as a family comprising of a husband, wife and minor children, collectively owning up to 2 hectares of cultivable land, as per State records.
It’s obvious that not any and everyone can benefit from the above scheme, and there are several criteria to be met before one can take away Rs. 6,000. One of the tougher criteria to be met is falling within the definition of a small and marginal farm household. Unfortunately, I cannot give in-depth details of the said scheme, so here is a critique of the above scheme, and whether it appears to be as good in real life as it does on TV.
As far as farmers and rural India are concerned, there is one particular announcement for stakeholders in the seafood industry, which will prove to be good for their market, i.e. a 2% interest subvention, which is likely to increase the production and exports of shrimps.
There is a pricing issue going on for shrimp farmers. So the government is attempting to resolve this problem by making loans available through the Kisan Credit Card Scheme, which will provide farmers with the benefit of the interest subvention (in other terms, it is a subsidy on interest rates).
The corporate point-of-view
Many of the pioneering corporate leaders of the country feel that the Budget of 2019 is populist rather than being fiscally prudent. Some of the expectations of the India Inc from Finance Minister Piyush Goyal are as follows:
What’s evident is that most of the expectations are related to taxation. The reason being a reduction in tax would allow companies to make more profits (ceteris paribus, i.e. other things remaining constant), granting them the freedom to plough back some of the earnings for making more investments. This will, in turn, promote the “Make in India” initiative along with the “Digital India” movement.
Unfortunately, Mr. Piyush Goyal didn’t provide much clarity on whether the government has heard the demands/requests of India Inc, but it’s safe to say that at least nothing adverse came out of the Budget.
Given the schemes announced, and introduced, farmers and rural India are likely to benefit, if and only if the government is able to implement them with utmost efficiency. Even though the government has noble ideas for bridging the income disparity in the country, we should be realistic and keep in mind that there are terms and conditions to be met, such as the involvement of State Governments, who may or may not function in accordance with the directions of the BJP government.
Only in the near future will we be able to clearly determine or witness whether farmers and rural India have benefitted from the schemes.
Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy of any agency, organization, employer, or any company. Fintuned Co. LLP shall not be held responsible in any manner whatsover, for any decision/action taken by readers on the basis of the content mentioned in the article. Readers are requested to exercise their best judgement before taking any decision/action. Fintuned Co. LLP shall also not be held responsible for any copyright infringement committed by the author in the process of writing and/or publishing this article and in the event any such offence is found, cooperate with necessary authorities to take remedial action
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