Budget Aims To Spur Growth In Post Demonetisation Era

Jaitley tries to placate voters ahead of assembly elections in five states.

- TN Ashok

The 2017-18 budget presented by the Modi government was different from others. Different because it was presented on the first of February instead of February 28 breaking centuries old tradition set by the British.

Second, there was no railway budget, it was dovetailed into the main general budget. It had the twin advantages – 1) tremendous saving in costs involving separate presentation of the budget ahead of main budget. 2) it was treated as part of the transport sector so that government could take a holistic view of how to develop the transport sector clubbing railways with road , sea, and other forms of transport.

Modi’s budget had two challenges. First to promote growth in a cash strapped economy since demonetisation of high value notes undertaken November 08 last year. Large number of small business had been severely hit by cash crunch as the entire supply chain management was disrupted, albeit temporarily.

Second was the challenge of upcoming assembly elections in five key states where BJP has high stakes. UP, Uttarakhand, Goa, Punjab among others. The challenge was to placate a large number of voters who had been hard hit by demonetisation and its cash crunch which left them standing in long queues and unable to spend on their daily needs.

So Finance Minister Arun Jaitley met both challenges successfully by first slashing the tax rate for income earners above Rs 2.5 lakhs by half, that is from 10% it was reduced to 5%. He also raised the exemption level to Rs 3 lakhs. Tax slabs however remained the same at 20% for incomes above Rs 5 lakhs and 30% for incomes above Rs 10 lakhs.