A bridge to the future

There were no major outlay announcements, but the Budget broke convention by announcing sops for rural households and the middle-income population

R Shankar Raman Chief Financial Officer, Larsen & Toubro — R Shankar Raman, Chief Financial Officer, Larsen & Toubro

Last Updated : Feb 02 2019 | 11:27 PM IST

In an election year, the finance minister has tried to balance fiscal discipline and rural welfare in the interim Union Budget presented in Parliament on Friday. The need to bridge the rural-urban divide and drive middle-income consumption while staying on track for fiscal consolidation dominated the Budget exercise.

There were no major outlay announcements, but the Budget broke convention by announcing sops for rural households and the middle-income population.

The PM Kisan Samman Nidhi will ensure a direct cash transfer to 1.2 million farmers' bank accounts. Income-tax rebates to the middle-income group will give a boost to consumption.

The Budget has also increased allocations to infrastructure and defence.

The 14 per cent increase in budgeted expenditure is sought to be financed by buoyant tax proceeds and higher borrowings. On the fiscal front for FY19, a slippage of 10 bps, given the conditions in the rural agrarian economy, is on expected lines and will not create a strain on the markets.

R Shankar Raman, Chief Financial Officer, Larsen & Toubro

Although a lot is being attempted on the reforms front, a structural shift will be needed to deliver better incomes and employment conditions. This will be possible only with investment-enabling policies, increased transparency, lower bureaucracy, faster clearances, tech adoption, reskilling of youth and job creation.

Aspiring to be $5trillion economy by 2022 is laudable. The government, however, needs to push investments and consumption by focussing on implementation of plans.