Budget in simple terms means “You give me taxes; I will give you the social and economic services.” The government implement taxes on the public and in return provide the social and economic services. The essential Social Services that government provides are education, medical and public health, housing, the welfare of SC, ST, OBC and minorities, social security, labor, employment and skill development. The essential economic services provided by the government are agriculture and allied activities, rural development, irrigation, energy, roads, railways, shipping, aviation, science technology and environment.
A budget can be judged by measuring the amount of tax revenue received by the government and in return the social and economic services provided by the government. On comparing the budget of 2018-19 with the actual situation in the year 2014-15, we find that the income tax slab has remained the same in 2018-19 as compared to 2014-15. The one significant change is that in 2014-15 the tax rate was 10% for income exceeding rupees 2.5 lakhs up to rupees 5 lakhs, however, in 2018-19 it is 5%.
Without putting an additional burden of taxation on middle-class people, the government has managed to increase the tax revenue by 82.5%. The credit for it goes to demonetization and GST which has increased the tax base. The people who were not paying the taxes in 2014-15 has started paying it in 2018-19.
On the expenditure part, the government has increased the expenditure on social services by 91% in 2018-19 as compared to the actual situation in 2014-15. The expenditure on economic services in 2018-19 has increased by 61% in 2018-19 as compared to 2014-15. Thus it is clear that the government is spending more on both the social and economic services.
Highlights of budgets 2018-19
- Standard Deduction
The government has allowed a standard deduction of Rs. 40,000 form the taxable income instead of medical and transportation expenses. It is not required to produce the bills and invoices to avail this deduction. The re-introduction of standard deduction will simplify the return filing process.
- Employment
The government, as it appears, is not bothered about employment in the public sector. The government is trying to create new employment opportunities in the private sector by providing easy loans and credit to the people particularly MSMEs which has been the priority of the government since 2014-15. The government wants larger number of the unemployed youth to become job creator rather job seeker.
- Agriculture
Like the Minimum support price (MSP) for the majority of Rabi crops which was fixed at least at one and a half times, the cost involved the government has decided to fix the MSP of Kharif crops similarly. The government has decided to keep MSP for the all unannounced crops of Kharif at least at one and half times of their production cost. With this formula, the prices of most crops would be significantly higher than 50% of the cost of production. Linking the MSP of the crops with the cost of production and family labor is a welcome step. It would help in realizing the goal of doubling the farmer’s income.
- National Health Protection Scheme
The budget of 2018-19 announced a “flagship National Health Protection Scheme to cover over ten crore poor and vulnerable families (approximately 50 crore beneficiaries) providing coverage up to 5 lakh rupees per family per year for secondary and tertiary care hospitalization.” (Budget Speech). If successfully implemented this would be “the world’s largest government-funded health care programme.” (Budget Speech). However, the budget does not provide the funds allocated for this scheme.
The government has planned to roll out this scheme by “October 2 and is to be funded in a 60:40 proportion by the Centre and states, with the premium per family estimated at Rs 1,000-1,200. It will be a cashless Aadhaar-linked facility with beneficiaries availing treatment anywhere in the country in empanelled private or public hospitals.” (Times of India). Niti Aayog has calculated an outgo of Rs 10,000-12,000 crore a year for the Centre and is confident of successful implementation with the help of low premiums it hopes to get from insurance firms.
The poor and vulnerable people are in need of this schemes. Its successful implementation is in the interest of the nation. We believe that the government must have done a proper study before announcing a scheme of such a large scale.
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