NEW DELHI: Finance Minister Arun Jaitley will have Bharat on his mind when he unveils the 2017 Union Budget for India, on Wednesday, under the heavy shadow of demonetisation.
Multilateral agencies have lowered India’s GDP growth projections for the next financial year to about 6 per cent from 7.3 per cent.
The FM is likely to splurge on agriculture and rural India over the middle class.
Economists predict that agriculture will register over 4 per cent growth rate in 2017-18, as against the average 0.5 per cent in the first two years of the Narendra Modi government.
Farmers are likely to love Budget 2017. Finance Minister Arun Jaitley is banking on last year’s “Bharat Budget” to show results. “The top consideration within the government is to substantially enhance the existing Rs 9 lakh farm credit by lowering the rate of interest for farmers.
The current policy puts farm credit at four per cent. The Centre bears the rest. Jaitley may further lower the rate to about two per cent, which will give maximum relief to debt-ridden farmers,” a top government source said.
Modi has targeted doubling farm income by 2022. Of late, the reluctance of states to implement key reforms has clouded the government’s plans with pessimism.
“The government is considering at the highest level to compensate farmers for the loss of income due to various reasons by averaging three years’ prices for any specific crop. The Centre may compensate the difference in price if the farmers are forced to sell their produce low,” said a senior official in the NITI Aayog.
In his budget, Jaitley may go selective with Chief Economic Advisor Arvind Subramanian’s Universal Basic Income idea, by using the yardstick only for marginal farmers who own less than three acres by giving them `3,000 as dole. Substantial budgetary allocations for agricultural research in the form of setting up more Indian Agricultural research Institutes, Indian Agricultural University and Kisan Vikas Kendra could be part of the NDA’s Bharat plan. “Research in agriculture is top priority, as value addition and innovation are seen as ways to substantially lift the income of people in the rural areas, which in turn can boost economic growth to a higher trajectory by ensuring robust demand in the manufacturing sector,” the official added.
Jaitley may bring cheer to the DeMo beleaguered middle class by enhancing the income tax exemption limit to Rs 3 lakh. Though home buyers may benefit with a rise in home loan interest deduction to `2 lakh from Rs 1,5 lakh a year, the Modi government appears more keen to make “Bharat” shine.