Promise and delivery: on Union Budget 2018

If the Union Budget is construed as an annual tug-of-war between populism and fiscal prudence, arguably it is the latter that prevailed in the past four budgets tabled by the NDA. However, populism seems to have gained an upper hand in Arun Jaitley’s latest effort. Despite exceptional buoyancy in direct tax revenues (18.7% growth in FY18) and record disinvestment proceeds (1 lakh crore), shortfalls in GST mop-ups and dividend receipts have forced the Finance Minister to ease off on fiscal consolidation as mandated by the FRBM Act. The Budget has reported a fiscal deficit of 3.5% (of GDP) for FY18 and pegged it at a high 3.3% for next year. The Economic Survey prepared the ground for a deviation, yet the actual numbers surprised the markets. Armed with a war chest of 24.4 lakh crore in budgeted receipts for FY19, Mr. Jaitley has homed in unerringly on the root causes of distress — un-remunerative farm incomes, unemployment, lack of social security nets and the squeeze on the middle-class taxpayer.

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With this in mind, Mr. Jaitley has announced a laundry list of ameliorative measures. While his intent is clearly welfarist, resource constraints have forced him to rely significantly on extra-budgetary resources and external agencies to give life to many proposals. If they fail to materialise, it can lead to a gap between promise and delivery. Consider agriculture. After asserting that minimum support prices (MSPs) should cover all crops and assure farmers 1.5 times their production cost, food subsidy allocations for FY19 have been upped by a relatively modest 29,041 crore. A ‘fool-proof’ mechanism has been mooted to avoid market prices falling below MSPs, but it is left to the Niti Aayog to work out the modalities. Setting up farmers’ markets is similarly a great idea to free small farmers from the tyranny of Agricultural Produce Market Committees (APMCs), but the project gets a mere 2,000-crore allocation. The ambitious rural package in this Budget brings in free gas connections to three crore new households, free electricity connections to four crore homes, two crore new toilets under the Swachh Bharat Mission, higher micro-irrigation coverage, and so on. But of the massive outlay of 14.34 lakh crore required to bankroll these grandiose plans, as much as 11.98 lakh crore is expected to be met from extra-budgetary resources. A similar template has been used in social sector schemes. The National Health Protection Scheme, to provide a 5 lakh health cover to 10 crore households, is a much-needed social security intervention to benefit poor households that rely overwhelmingly on private health care. But there is little clarity on modalities. The entire clutch of proposals on improving learning outcomes, providing universal health coverage and alleviating the lot of minorities and girl children is expected to be funded through a mere 16,000-crore increase in allocations to 1.38 lakh crore. Infrastructure appears to be one of the few sectors where the funding problem has been addressed, with PSUs bankrolling a significant proportion of the 5.97-lakh crore outlay for FY19. While being liberal in its announcements for rural India, the Budget has been frugal in its giveaways to the middle class and the corporate sector. Expectations of an increase in the basic exemption limit on income tax have been belied; instead, a standard deduction of 40,000 is back for salaried taxpayers. While it is only fair that the salaried pay income tax on their net income (after expenses) as the self-employed do, this deduction (which also replaces transport and medical reimbursements) is too small to establish real parity. The clamour for an across-the-board cut in the basic corporate tax rate from 30 to 25% has also been ignored, with the cut limited to mid-size companies (up to 250-crore turnover). Though this will benefit the overwhelming majority of corporate tax filers, how this impacts the competitive edge of India’s largest companies in the global context will be debated. Especially so, since the U.S. recently slashed its corporate tax rate to 21% and European nations average 20%. For the salariat and the corporate sector, the increase in education cess will offset some of the gains from these tax cuts. Senior citizens have benefited, particularly from the tax relief on interest from bank deposits and post office schemes, which has been hiked from 10,000 to 50,000 a year. These interest payouts are also exempt from the vexatious TDS provisions. This relief renders senior citizens far less vulnerable to steadily dwindling interest rates on bank deposits and small savings schemes; it also helps them to continue relying on fixed-income instruments to cover living expenses. This relief may reverse the unhealthy trend of risk-averse savers shifting wholesale from bank deposits to market-linked options such as equity mutual funds, in search of higher returns. The imposition of 10% long-term capital gains tax on profits from shares and equity mutual funds could dampen market sentiment in the near term, but is unlikely to have any structural impact on domestic equity flows. Equities are favoured by the relatively affluent savers and alternative financial instruments such as bonds and fixed deposits invite far higher tax incidence. Moreover, the bulk of new allocations flowing into Indian equities in the last two years have come from retail investors, most of them saving for the long term. It is unlikely that they will beat a hasty retreat from shares or mutual funds just because of a modest levy. Overall, the Budget has a sense of direction that is difficult to find fault with. If some of the proposals seem half-hearted or are not taken to their logical end, it may be the result of revenue constraints. It is to be hoped that as the revenue base improves and GST collections stabilise, future budgets can put the finishing touches on the welfare proposals.


1) Construed

Meaning: Analyse the syntax of (a text, sentence, or word).

Example: “both verbs can be construed with either infinitive”

2) Tug-of-war

Meaning: A situation in which two evenly matched people or factions are striving to keep or obtain the same thing.

Example: “a tug of war between builders and environmentalists”

3) Prudence

Meaning: The quality of being prudent; cautiousness.

Example: “we need to exercise prudence in such important matters”

Synonyms: Wisdom, Judgement

Antonyms: Folly, Recklessness

4) Buoyancy

Meaning: A high level of activity in an economy or stock market.

Example: “there is renewed buoyancy in the demand for steel”

Synonyms: Vigour, Strength

Antonyms: Depression

5) Ease off

Meaning: To gradually stop or become less.

Example: At last the rain began to ease off.

Synonyms: Less, Smaller

6) Consolidation

Meaning: The action or process of combining a number of things into a single more effective or coherent whole.

Example: “a consolidation of data within an enterprise”

7) Homed in unerringly on

Meaning: To find and give a lot of attention to something or someone.

Example: The report homed in on the weaknesses in the management structure.

Synonyms: Aim

8) Remunerative

Meaning: Financially rewarding; lucrative.

Example: “highly remunerative activities”

Synonyms: Lucrative, Well paid

9) Squeeze

Meaning: Obtain (something) from someone with difficulty.

Example: “councils will want to squeeze as much money out of taxpayers as they can”

Synonyms: Extort, Force

10) Laundry list

Meaning: A long list of things.

Example: There’s a whole laundry list of things to do.

11) Ameliorative

Meaning: To make a bad or unpleasant situation better

Example: Foreign aid is badly needed to ameliorate the effects of the drought.

12) Constraints

Meaning: A limitation or restriction.

Example: “time constraints make it impossible to do everything”

Synonyms: Restriction, Limitation

13) Asserting

Meaning: State a fact or belief confidently and forcefully.

Example: “the company asserts that the cuts will not affect development”

Synonyms: Declare, Maintain

14) Fool-proof

Meaning: Incapable of going wrong or being misused.

Example: “a foolproof security system”

Synonyms: Infallible, Unfailing

Antonyms: Flawed

15) Mooted

Meaning: Raise (a question or topic) for discussion; suggest (an idea or possibility).

Example: “the scheme was first mooted last October”

Synonyms: Raise, Broach

16) Tyranny

Meaning: Cruel and oppressive government or rule.

Example: “refugees fleeing tyranny and oppression”

Synonyms: Absolutism, Autocracy

Antonyms: Democracy, Liberality

17) Ambitious

Meaning: (of a plan or piece of work) intended to satisfy high aspirations and therefore difficult to achieve.

Example: “an ambitious enterprise”

Synonyms: Difficult, Exacting

Antonyms: Easy, Modest

18) Outlay

Meaning: An amount of money spent on something.

Example: “a modest outlay on local advertising”

Synonyms: Expenditure, Investment

19) Bankroll

Meaning: Support (a person, organization, or project) financially.

Example: “the project is bankrolled by wealthy expatriates”

20) Grandiose

Meaning: Conceived on a very grand or ambitious scale.

Example: “grandiose plans to reform the world”

Synonyms: Ambitious, Bold

Antonyms: Modest, Humble

21) Template

Meaning: Something that serves as a model for others to copy.

Example: “the plant was to serve as the template for change throughout the company”

22) Overwhelmingly

Meaning: To a very great degree or with a great majority.

Example: “the country voted overwhelmingly for independence”

23) Clutch

Meaning: A person’s power or control, especially when regarded as inescapable.

Example: “Tom had fallen into Amanda’s clutches”

Synonyms: Power, Control

24) Alleviating

Meaning: Make (suffering, deficiency, or a problem) less severe.

Example: “he couldn’t prevent her pain, only alleviate it”

Synonyms: Reduce, Ease

Antonyms: Aggravate

25) Frugal

Meaning: Sparing or economical as regards money or food.

Example: “I’m a bit too frugal to splash out on designer clothes”

Synonyms: Thrifty, Sparing

Antonyms: Extravagant

26) Exemption

Meaning: The action of freeing or state of being free from an obligation or liability imposed on others.

Example: “vehicles that may qualify for exemption from tax”

Synonyms: Immunity, Exception

Antonyms: Liability

27) Reimbursements

Meaning: The action of repaying a person who has spent or lost money.

Example: “reimbursement of everyday medical costs”

28) Clamour

Meaning: A strongly expressed protest or demand from a large number of people.

Example: “the growing public clamour for more policemen on the beat”

Synonyms: Urging, Insistence

29) Slashed

Meaning: Reduce (a price, quantity, etc.) greatly.

Example: “the workforce has been slashed by 2,000”

Synonyms: Reduce, Cut

Antonyms: Raise

30) Vexatious

Meaning: Causing or tending to cause annoyance, frustration, or worry.

Example: “the vexatious questions posed by software copyrights”

Synonyms: Annoying, Irritating

31) Vulnerable

Meaning: Exposed to the possibility of being attacked or harmed, either physically or emotionally.

Example: “we were in a vulnerable position”

Synonyms: Unsafe, Unprotected

Antonyms: Invulnerable, Resilient

32) Dwindling

Meaning: Diminish gradually in size, amount, or strength.

Example: “traffic has dwindled to a trickle”

Synonyms: Diminish, Decrease

Antonyms: Increase, Flourish

33) Relying on

Meaning: To need a particular thing or the help and support of someone or something in order to continue, to work correctly, or to succeed.

Example: The success of this project relies on everyone making an effort.

34) Risk-averse

Meaning: Disinclined or reluctant to take risks.

Example: “risk-averse investors”

35) Imposition

Meaning: A tax or duty.

Example: “the government began levying special impositions”

Synonyms: Levy, Charge

36) Dampen

Meaning: Make less strong or intense.

Example: “nothing could dampen her enthusiasm”

Synonyms: Lessen, Diminish

Antonyms: Heighten

37) Affluent

Meaning: (especially of a group or area) having a great deal of money; wealthy.

Example: “the affluent societies of the western world”

Synonyms: Wealthy, Opulent

Antonyms: Poor

38) Retreat

Meaning: (of an army) withdraw from enemy forces as a result of their superior power or after a defeat.

Example: “the French retreated in disarray”

Synonyms: Withdraw, Retire

Antonyms: Advance

39) Levy

Meaning: A sum collected as a supplement to an existing subscription.

Example: “the trade-union political levy”

Synonyms: Imposition, Exaction

40) Half-hearted

Meaning: Without enthusiasm or energy.

Example: “a half-hearted attempt”

Synonyms: Unenthusiastic

Antonyms: Enthusiastic


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