Budgetary dreams

There are just a few days to go before Union Finance Minister Nirmala Sitharaman reads the Budget speech for the fourth time. With India going through its third year of Covid, expectations are rife that the announcements would take the third wave into consideration. However, given the quick rise and equally speedy fall of the Omicron wave as predicted by experts, the impact of the third wave on the FM's speech may be limited. The overriding factor that has been working in the shadows would obviously be the five states going to polls. Punjab, Uttarakhand, Goa, Manipur, and (the 'mother of all battles') Uttar Pradesh will go to polls between February 10 and March 7. It doesn't take a genius to guess that much of the Budget will therefore assume a populist stance.

So, expect more sops targeting the rural community, given that Uttar Pradesh — the largest state in India — is predominantly rural. Remember, only recently did the government roll back the farm laws that led to the farmers finally calling off their long-standing bitter protests. The government would look at using the Budget to allay the fears of the agricultural community and appease irate farmers. Pundits predict greater outlay under the Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA) that would also help with the alarming rate of unemployment, both rural and urban, plaguing the country. Targeting the farming populace, the Budget may make greater allocations under PM Kisan Samman Nidhi scheme and the masterstroke of farm loan waivers. Nothing can endear the government to the estranged farmer as waiving off of loans.

While rural spending is sure-shot, there is also expectation of a slow fiscal consolidation. Covid-19 has been particularly tough on the Micro, Small & Medium Enterprises (MSMEs) and the Budget may carry some good tidings for the sector. There is little to no chance of big-ticket reforms in this Budget but rather sharing of further details about the implementation of previously announced reforms. Neither is the current decline of the stock market expected to be stymied through budgetary pronouncements.

The startup community however, remains optimistic. Prime Minister Narendra Modi christened January 16 as 'National Startup Day' and hailed startups as the backbone of the new India. Both startup entrepreneurs and investors with skin in the game are hopeful that the Budget may tackle some well-established demands. Domestic investors want to be taxed at par with their foreign counterparts vis-à-vis long-term capital gains (LTCG). Desi startups would also want the green signal to be able to list abroad; their investors believe it would keep the money in the country as startups would be deterred from incorporating on foreign shores. The younger lot also want the government to focus on climate change, incentivise green businesses, and dangle bigger carrots for customers to be eco-friendly and for example, encourage them to opt for electric vehicles.

Last, and nowadays feeling quite like the least, can the much-squeezed, heavily taxed middle-class hope for a reprieve? The push is for an increase in Section 80C limit and tax exemption cap for health insurance under Section 80D. Both these moves will alleviate the common man's tax burden and allow for focus on healthcare spends necessitated in the Covid world. Upping the standard income tax deduction, providing tax relief for people saving for children's education, subsidizing laptops and smartphones so that children can avail seamless online education would prove to be necessary boons to the middle class who is already battling sky-high inflation and economic distress. Along with tax cuts, the small saver also needs to see their money yielding better results. Well, the wish-list from the FM is long but the wait isn't and we shall know very soon if any of them have been answered.

The writer is an author and media entrepreneur. Views expressed are personal