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How will Budget of SOPS Impact the Lok Sabha Elections 2019

Posted by Aditya Singh on February 15, 2019 | Comment

How will Budget of SOPS Impact the Lok Sabha Elections 2019 5.00/5 (100.00%) 2 votes

Lok Sabha Elections 2019 - Budget of Sops

Interim Budget 2019-20 is the mother of all election budgets. A politician might give it nine marks out of 10, but an economist will give it no more than five out of 10. This is a populist budget which was prepared to keep a keen eye on the upcoming Lok Sabha elections 2019. The Budget contained elements that are aimed at benefitting the three major segments of the population- farmers, informal sector workers and salaried taxpayers- with announcements of an income support scheme for farmers, a new pension scheme for informal sector workers, and tax exemptions for salaried workers.

 In his Budget speech, Finance Minister Piyush Goyal announced the Pradhan Mantri- Kisan Samman Nidhi (PM-KISAN) Scheme dedicated to the farmers. The scheme is aimed at providing income support to vulnerable landholding farmers having cultivable land up to 2 hectares. Under this programme, the vulnerable farmer families would be provided direct income support of ₹6,000 annually in three installments of ₹2,000.

 The farming crisis in the country has deepened in the last few years and this was one of the major reasons for the Bhartiya Janta Party’s defeat in the Assembly elections in five states last year. The announcement for farmers is seen essential by the Central government as the farming community became hostile to the party. But the scheme provisions to provide only ₹500 per month and at ₹500 per month, it will amount to less than one-fifth of an average household’s income. The first installment of ₹2,000 would be directly transferred to the beneficiaries in March just a few days before the upcoming Lok Sabha elections 2019.

 But the scheme provisions to provide only ₹500 per month and at ₹500 per month, it will amount to less than one-fifth of an average household’s income. The opposition accused Narendra Modi-led government of trying to woo the farming communities before the Lok Sabha elections 2019. Only a few days ago, Congress President Rahul Gandhi announced that his party will provide a Universal Basic Income to the poor people if his party comes into power. I would now be interesting to see how Mr. Gandhi and his party will shape the strategy in the coming days.

 While keeping the tax rates unchanged, the Finance Minister also announced that those earning up to ₹5 lakhs a year would be exempt from income tax. Various proposals announced in the interim Budget would ease the tax burden on salaried workers belonging to the middle and lower income classes. As tax base has widened in the Narendra Modi regime. Thus, the Finance Minister made an announcement of the full rebate of taxes for almost 3 crore people. There is no denying the fact that this announcement was also made just to woo the lower and middle salaried groups.

 A new scheme called the Pradhan Mantri Shram-Yogi Maandhan was also launched which will benefit unorganized sector workers who have a monthly income up to ₹15,000. It will provide them a monthly pension of ₹3,000 from the age of 60. Workers will contribute an amount ranging from ₹55 to ₹100 per month, depending on their age, at the time of joining the scheme.

 The main focus of the Budget was on the rural sector and the urban middle-class. The government was ready with relief measures for farmers, benefits for unemployed youth, higher tax exemptions for the middle class and small businesses in order to woo the votes from the different economic group. The budget betrays an attitude of just making promises to get over a set of adverse circumstances without thinking through the details. The approach was seen also at the time of roll out of demonetisation and the Goods and Services Tax. Policymaking, for sure, calls for a far more serious approach.

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